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1. Dollar weakens again as Trump considers naming next Fed Chair early in attempt to undermine Powell.

The dollar slipped to a three-year low after the Wall Street Journal said President Donald Trump is considering accelerating when he will announce the next chair of the Federal Reserve. That's because if U.S. interest rates fall foreign investors tend to ditch the dollar in favor of other currencies, because they're able to find higher yields elsewhere.

Stocks appeared to get a boost from the news, with futures tracking the benchmark S&P 500 and tech-heavy Nasdaq 100 rising on Thursday. That's because by Trump's nominee could try to influence rate decisions, as a sort of backseat driver. Investors will read the prospect of Trump naming a new Fed chair by October as a signal that early interest-rate cuts are more likely.

Over the longer-term, the shadow chair may end up being bad news for the market. Inflation is steady but still running clear of the Fed's 2% target, and economists are cautioning that tariffs and Trump's signature tax bill could soon spark a flare-up. Early rate cuts would add fuel to the fire.

2. European banking sector going strong.

Bulls are convinced Europe’s banking stocks — up 40% over the past year, by far the best sector — have more potential even as momentum slows following a strong performance over the recent years.

“We are pleasantly surprised with how the market has digested the tariff risks, and we see it as an overdue vote of confidence in European banks that have managed to avoid slipping on the numerous banana skins of the past five years,” say KBW analysts led by Andrew Stimpson.

“The outperformance is not over yet, and we still advocate an overweight position in the sector, the same stance we have had for almost five years now.” The significant re-rating banks achieved over recent years means they are no longer bargains. By some metrics, valuations are closing in on long-term averages, so the stocks need further strength in earnings and capital returns for another leg higher. That will likely be harder now that rates have fallen to 2%. At least most of the European Central Bank’s easing action appears to be done, with only one cut expected over the next 12 months.

“Banks are still trading at relatively low valuations despite outperformance, and ranked the highest among sectors from an earnings momentum and earnings revisions perspective,” say Citi strategists led by Beata Manthey, who raised the sector to overweight this week. “They are relatively tariff insulated, benefit from dollar weakness and should be key participants in many domestic themes in Europe.”

3. Nvidia shares surge and becomes the world's most valuable company again.

The stock has rallied 78.1 per cent in the past two-and-a-half months and has gained nearly $1.42 trillion from its lowest close.

At the annual meeting, CEO Jensen Huang reassured shareholders about strong ongoing demand and reiterated that the computing industry is still in the early stages of a sweeping AI infrastructure transformation. Analysts expect Nvidia to carry on the momentum this year, with its next-generation Blackwell Ultra chips being rolled out later this year, alongside higher volumes of Blackwell shipments. Experts expect the company's gross margins should benefit in the second half of the year.

Micron Technology, one of Nvidia's biggest competitors and maker of high-bandwidth memory (HBM) chips, reported a big jump in sales and earnings amid booming demand, which could support Nvidia's rise in the near future.

4. “The era of diversification has begun”, says Goldman.

Deterred by the sovereign debt crisis in Europe and the decline in Chinese exports, international investors have bought ever-larger amounts of faster-growing, better-performing U.S. assets. For their part, U.S. investors clearly had no incentive to diversify.

This combination created a virtuous cycle, compounded over a long period to establish an enormous US valuation premium.

Since the start of 2025, though, a more resilient Chinese economy and a major change in German fiscal policy with the release of the "debt brake" began to attract investors to cheaper markets overseas. The burgeoning U.S. deficit and U.S. policy uncertainty in the areas of trade, foreign affairs and fiscal responsibility raised the risk premium on the dollar.

The dollar's 10% depreciation this year means foreign exchange has become a major driver of multi-asset portfolio risk.

Goldman's forex strategists anticipate further downward adjustment for the dollar as the net upshot of tariff increases, eating into the corporate profits and the real incomes of U.S. households that drove dollar strength in the first place.

Moreover, as the dollar is called into question, rates and interest costs are mounting, placing further strain on the U.S. budget.

Goldman notes that there have been tentative signs of investors broadening their geographical and sectoral exposure but that the concentration risk remains elevated in global portfolios.

The recommendation, then, according to Goldman, is that investors ought not to extrapolate trends that have been in place since the global financial crisis indefinitely.

Things are changing.

5. The solid state battery is almost there.

Shares of solid-state electric-vehicle-battery maker QuantumScape soared after the company announced an important milestone.

Solid state, a bloc of lithium, means the batteries have no liquid electrolyte, facilitating the flow of electrical charge.

Solid-state EV batteries promise lower costs, more per-charge range, and a better safety record. They represent the holy grail for EV’s, making them more capable and cheaper than comparable gasoline-powered car. The development also has some implications for automakers, notably Volkswagen as an early investor, looking to commercialize cheaper and more efficient batteries in their EVs.

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