Nvidia earnings fuel equities gains despite dovish Fed

Nvidia earnings fuel equities gains despite dovish Fed
Tech firm's results reassured investors of AI boom.
MAY 23, 2024

European stocks and US futures climbed after upbeat earnings from Nvidia Corp. reinforced optimism over the global artificial-intelligence boom.

Europe’s Stoxx 600 climbed 0.3%, pulled higher by a jump in the tech sector. Futures on the S&P 500 pointed to a 0.5% gain at the Wall Street open. US Treasuries were little changed after slipping on Wednesday when Federal Reserve minutes showed officials remained in no rush to cut interest rates. The dollar traded steady.

Equity markets are once again getting a boost from tech after a highly anticipated earnings report from Nvidia produced another bullish sales forecast. A Bloomberg gauge of Asian chipmakers jumped as much as 1.9%, its fourth day of gains.

“For anyone in doubt that growth in AI and the supply chain is fading, Nvidia’s results, tone, and guidance completely disprove that thesis,” said Robert Alster, chief investment officer at Close Asset Management. 

Traders in Europe will be watching data due later on services, manufacturing and consumer confidence. 

In Asia, Korea unveiled a $19 billion package of incentives to bolster its chip sector, a boon to Samsung Electronics Co. and SK Hynix Inc. as they race to stay ahead in an increasingly competitive industry. 

Nvidia’s earnings “gives more room for upside for Asian semiconductor stocks,” said Rajat Agarwal, Asia strategist at Societe Generale SA in Bengaluru. “It elongates the growth story and allays any concerns of slowdown for Asian chipmakers.”

At the same time, a gauge of tech shares listed in Hong Kong dropped amid a brewing price war between Alibaba Group Holding Ltd. and Tencent Holdings Ltd. over cloud services.  

Gold extended declines after dropping 1.7% Wednesday following the Fed minutes. West Texas Intermediate also slipped, on track for a fourth daily loss. Copper prices fell on signs of weakening demand.

Key events this week:

  • Eurozone S&P Global services and manufacturing PMIs, consumer confidence, Thursday
  • G-7 finance meeting, May 23-25
  • US new home sales, initial jobless claims, Thursday
  • Fed’s Raphael Bostic speaks, Thursday
  • US durable goods, consumer sentiment, Friday
  • Fed’s Christopher Waller speaks, Friday

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.3% as of 8:17 a.m. London time
  • S&P 500 futures rose 0.5%
  • Nasdaq 100 futures rose 0.9%
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index was little changed
  • The MSCI Emerging Markets Index fell 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0820
  • The Japanese yen rose 0.1% to 156.60 per dollar
  • The offshore yuan was little changed at 7.2559 per dollar
  • The British pound was little changed at $1.2720

Cryptocurrencies

  • Bitcoin rose 0.1% to $69,497.04
  • Ether rose 0.9% to $3,782.25

Bonds

  • The yield on 10-year Treasuries was little changed at 4.41%
  • Germany’s 10-year yield declined two basis points to 2.52%
  • Britain’s 10-year yield declined two basis points to 4.21%

Commodities

  • Brent crude fell 0.4% to $81.61 a barrel
  • Spot gold fell 0.7% to $2,362.53 an ounce

This story was produced with the assistance of Bloomberg Automation.

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