The world’s biggest company flying higher in the market on an ebullient forecast. Cryptos continuing to surge, Bitcoin up through 80%, as we wait for the Clarity Act to be signed. A continuation of the debasement trade as global bond yields rise, gold (XAUUSD) up 6% on the week. All eyes on Warsh’s keynote speech at Jackson Hole tonight as tension builds over Fed policies. Read on for details and a preview of what will move markets next week.
Nvidia came within a whisker (if we can call $8bn a whisker) of breaking the record for the largest one-day gain by a stock on Thursday. The most valuable company in the world added $442bn in market cap, falling just short of the record set by Microsoft earlier in the month. The initial reaction to their quarterly earnings release was muted, even negative. Results on the whole were in line with analysts’ expectations. It was the forecast in the subsequent conference call that really got investors excited. CFO Colette Kress announced a forecast of 70% sales growth next year, a projection significantly stronger than the average estimate of 45%. On top of that extraordinarily positive outlook, the execs explained that it would be even higher if not for ongoing supply constraints.
Nvidia’s forecast for ongoing and indeed accelerated demand in the AI economy boosted the entire sector, and the broader market. Fears of a bubble and concerns over circular deals still linger, but strong results like this, and even more importantly forecasts, from the top provider of AI accelerators go a long way to easing such worries for market participants. “Vera Rubin, now in full production, was built to power exactly this moment”, said CEO Jensen Huang. Having said that, less optimistic observers did point out that while the flow-ons were broad, every other sector was in the red through the same session. As such perhaps today’s trading will give a better indicator of whether or not wider weakness was temporarily masked.
On Thursday, DJT signed a directive that orders the renaming of Lake Ontario, one of the Great Lakes straddling the US-Canada border, to Lake America. This symbolic if petulant move was the latest in the on again off again trade war between the neighbouring nations. The spat has reignited after the States hit Canadian goods with a 50% tariff after the latest round of talks broke down. On 8 September, retaliatory duties are set to take effect, as announced by Prime Minister Carney, leader of the “51st state”. Trump has accused Carney of talking tough in the lead-in to elections in Quebec and an independence vote in Alberta, both in October this year. “If you think about it, we have a Gulf and we have a lake now. All we need is an ocean,” said the president somewhat ominously. He did admit though that Canadian aluminium is a key requirement for the US economy.
While inflation in Australia cooled to 3.5% in July, down from 3.8%, it nonetheless came in hotter than the expected 3.2%. As a result, interest rate markets swiftly repriced the likelihood of rate hikes to come. The chance of another hike coming by November is now priced at 78%. That month’s announcement from the RBA comes shortly before the jump of the Melbourne Cup. Aussie punters may well find themselves flicking from their favoured news channel over to their favoured racing channel on the first Tuesday in November, with varying degrees of fortune riding on both outcomes. The RBA has made its view and intentions clear, “that high inflation does not become embedded”, so this sticky set of numbers is set to further test their willingness to back that up.
Fed Chair Kevin Warsh is scheduled to deliver his address at Jackson Hole at 1400 GMT today. His speech will be scrutinised to gauge the likelihood of interventions to come and how hard Warsh is willing to lean against the recent easing in financial conditions. Extension or otherwise of debasement trades will likely be seen in the immediate aftermath. Elsewhere, the RBNZ will hand down a rate decision on Wednesday, they are expected to hike by 25bp. And late in the week will come Nonfarm Payrolls, as important as ever in gauging the resilience of the labour market.
In the earnings release department, highlights include NIO, Palo Alto, Broadcom and Lululemon. Go well out there.
This material is provided by Fintrix Markets for marketing and informational purposes only and constitutes a marketing communication, not independent investment research.
Fintrix Markets does not guarantee the accuracy, completeness, or timeliness of the information. It is provided for general information only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial product.
The information does not take into account individual financial circumstances, objectives, or needs. Recipients should obtain independent professional advice before making investment or trading decisions.
No part of this material may be reproduced or distributed without Fintrix Markets’ prior written consent.
Email: support@fintrixmarkets.com
Call: +357 22007860
