Momentum in artificial-intelligence servers lifted Hewlett Packard Enterprise Co. to a sizable revenue beat in the latest quarter as the company returned to growth. HPE reported $7.2 billion in total revenue for its fiscal second quarter, up 3% from a year before and ahead of the $6.8 billion FactSet consensus. Growth in the latest quarter came after HPE posted a 14% revenue decline in the fiscal first quarter. The stock climbed 15.3% in Tuesday’s extended session. The company called out AI as a chief driver, as cumulative AI systems orders came out to $4.6 billion. Chief Financial Officer Marie Myers spoke of “a pipeline that has…multitudes of the current orders.” While current Nvidia Corp. chips can work with water cooling; Myers thinks direct liquid cooling will become more necessary once the Blackwell line rolls out. Overall server revenue grew 18%, but intelligent edge revenue fell 19%. While AI servers are a strong growth area for HPE, the company is seeing cyclical pressures in networking, which are weighing on margins. Adjusted gross margins were 33.1%, down from 36.2% both sequentially and relative to a year before. AI systems had a 11% operating margin, Myers said, in line with what management had expected.

The Swiss stock market performed well on Tuesday compared with the rest of Europe, despite renewed headwinds from the currency side. The SMI rose minimally to 12,009 points. Of the 20 SMI stocks, there were 11 losers and 8 gainers, with Novartis closing unchanged. A total of 23.67 million shares were traded (Monday: 22.97 million). The leading index was supported by heavyweight Nestle, among others, which had already been one of the favourites the previous day. This time the share price rose by 1.2 per cent, although there was again no news about the company, which is considered to be comparatively less susceptible to economic cycles. Roche (+0.9%), another SMI heavyweight considered defensive, also contributed to the SMI performance. The day's news-free winners were Lonza with a gain of 1.5 per cent. Kühne + Nagel climbed 1.0 per cent. They were bought in the wake of positive news from competitor Moeller Maersk. The Danish company raised its outlook for the second time in four weeks. At the bottom of the SMI was UBS, falling by 2.2 per cent. In the second tier, Julius Baer lost 1.2 per cent. Banking stocks were weak across Europe. The market is thus increasingly pricing in the expected turnaround in interest rates, according to analysts. Banks tend to benefit from higher interest rates as these are favourable for margins in the lending business.

The European stock markets retreated on Tuesday, as investors analysed new economic indicators in the United States, while already looking ahead to the European Central Bank's (ECB) monetary policy announcements, scheduled for Thursday. The Stoxx Europe 600 index fell by 0.5% to 517.1 points. In Paris, the CAC 40 and SBF 120 lost 0.8% each. The DAX 40 dropped 1.1% in Frankfurt and the FTSE 100 gave up 0.4% in London. The troubled digital services group Atos (-14.4%) continued its slide on Tuesday. Oil and oil-related stocks fell back, weighed down by the fall in crude oil prices. In Paris, TotalEnergies shed 2.4%, Maurel et Prom 5.6%, Technip Energies 4.4% and Viridien 4.1%. In London, Shell was down 2.1% and BP gave up 3.8%, while in Madrid, Repsol declined by 1.7%. In Milan, Eni slipped 2.8% and Saipem slumped 4.3%. The Franco-Italian semiconductor manufacturer STMicroelectronics (+1.9%) announced on Tuesday that it had signed a long-term agreement with the Chinese car manufacturer Geely for the supply of silicon carbide (SiC), a key component in the next generation of electric vehicles. Saint-Gobain (-0.6%) confirmed that it had completed the acquisition of Bailey, a Canadian group specialising in metal frameworks.

The S&P 500 staged a midday reversal and eked out a gain for a third consecutive day. The broad index edged up 0.2%, bringing its advance for the year to around 11%. The tech-heavy Nasdaq added 0.2%. The Dow Jones Industrial Average rose 0.4%. On Tuesday, fresh data showed that the number of job openings in the U.S. sank in April to a more-than three-year low of 8.1 million. Now, all eyes will be on the jobs report this Friday. A recent swoon in oil prices has also highlighted expectations for a potentially weakening economy and concerns about oversupply. Most-actively traded contracts for Brent crude, the international benchmark, dropped more than 1% Tuesday, to trade around $78 a barrel, its lowest settle value since February. Exxon Mobil fell 1.6%. Marathon Oil and Hess lost 1.8% and 0.8%, respectively. Tuesday, meme stocks remained in focus, with GameStop shares slipping 5.4%. The pullback followed a big rally for the shares after a Reddit account tied to meme icon Keith Gill posted a screenshot of his stock and options portfolio. Among individual stocks, Carnival rose by 5.8 per cent. The cruise company intends to discontinue its P&O Cruises Australia brand and integrate its Australian activities instead. However, other sector stocks were also firm in the market, which was explained by recent optimistic statements as well as the fall in oil prices. Norwegian Cruise Line climbed by around 4 per cent, Royal Caribbean by just under 3 per cent. Bath & Body Works fell by 12.8 per cent. The perfume retailer had spooked investors with a disappointing profit forecast. Healthequity raised its forecast for the year after the fintech company's first-quarter figures exceeded market expectations. The share price climbed by 2.7 per cent. The share price of biopharmaceutical company Annexon shot up by almost 31 per cent, driven by positive trial results.

Asian indexes diverged for the Wednesday trading session. In Tokyo, the Nikkei-225 fell by 1.1 per cent. In Hong Kong, the Hang Seng Index rises slightly by 0.3 per cent, while the Shanghai Composite on the Chinese mainland declines by 0.4 per cent. The Kospi in South Korea increased by 0.9 per cent. South Korea's revised inflation-adjusted real gross domestic product (GDP) grew by 1.3 per cent in the first quarter compared to the previous quarter, data from the Bank of Korea showed on Wednesday. Exports grew by 1.8 per cent in the January to March period due to strong demand for locally manufactured semiconductors, mobile phones and oil products, while imports dropped by 0.4 per cent.

Treasury yields extended declines Tuesday after U.S. data pointed to a labor market that appears to be cooling. The 10-year Treasury note yield fell by 7 basis points to 4.332%, and the 2-year Treasury note yield declined by 5 basis points to 4.772%, returning to their lowest levels since mid-May.

Bank of America upgrades Logitech target to CHF 102 (85) - Buy
Price target DocMorris: UBS lowers to CHF 29 (31.90) - Sell
UBS raises target Hapag-Lloyd to 106 (101) EUR - Sell

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