June 23, 2024

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European and US stock futures rise after Nvidia results: Markets wrap

European and US stock futures rise after Nvidia results: Markets wrap

(Bloomberg) — European stock futures rose alongside their U.S. counterparts and Asian stocks after Nvidia Corp.’s upbeat earnings boosted optimism about the global artificial intelligence boom.

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Sentiment toward the stock was boosted after the giant chipmaker said second-quarter revenues would reach about $28 billion, exceeding the $26.8 billion that analysts had expected. The company also announced a 10-for-1 stock split and boosted its quarterly dividend by 150%. A Bloomberg gauge of Asian chipmakers jumped as much as 1.9%.

Nvidia’s earnings “give more room to upside for Asian semiconductor stocks,” said Rajat Agarwal, an Asia strategist at Société Générale in Bengaluru. “It prolongs the growth story and mitigates any slowdown fears for Asian chipmakers.”

Japanese stock indexes led equity gains in Asia, while stocks in Taiwan and South Korea also rose. Korean stocks also strengthened after Central Bank Governor Ri Chang-yong said that the possibility of raising interest rates is limited at the present time. He was speaking after the Bank of Korea left its key interest rate unchanged. Shares fell in Australia, China and Hong Kong.

Chinese stocks were the biggest drag in the region, with technology names leading the decline. A gauge of Hong Kong-listed technology stocks fell amid a brewing price war between Alibaba Group Holding Ltd and Tencent Holdings Ltd over cloud services.

Read more: Nvidia paves way for AI stocks to maintain strength

Treasuries were little changed in Asia. Policy-sensitive shorter-maturity bonds fell on Wednesday after Federal Reserve minutes showed officials were in no rush to cut interest rates. “Several” Fed officials expressed uncertainty about how restrictive the policy would be on the economy — but the minutes also noted that the policy “was viewed as restrictive.”

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“I felt the signals from the FOMC that the likelihood of higher interest rates for a longer period of time is negative for most Asian currencies and therefore capital markets,” said Chen Yao Ng, investment director at Aberdeen. “It’s the currency effect.”

The dollar fell against all of its G10 peers, eroding some of the gains it made on Wednesday. There was little change in the yen after it fell to its lowest level since April in early Asian trading. The People’s Bank of China lowered the yuan’s exchange rate to its weakest level since January.

The New Zealand dollar strengthened after Reserve Bank Governor Adrian Orr said the central bank did not want to risk an explosion in inflation expectations.

Technology profits

US technology sector earnings were among the strongest in the first quarter reporting season, with revisions in the sector outpacing the rest of the market. However, the earnings results also point to a broadening market, according to Solita Marcelli of UBS Global Wealth Management.

“We remain positive on the AI ​​trend and maintain our preference for big technology given its advantageous market positions,” she said. “We expect global technology earnings to grow by 20% and 16% this year and next, respectively, led by the semiconductor sector where we see investment opportunities.”

South Korea unveiled a $19 billion incentive package to boost its chip sector, a gift to Samsung Electronics and SK Hynix as they race to stay ahead in an increasingly competitive industry.

Gold extended its declines after falling 1.7% on Wednesday following the Federal Reserve meeting minutes. WTI also fell, on track for a fourth daily loss. Copper prices fell amid signs of weak demand.

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Main events this week:

  • Eurozone services and manufacturing PMI, consumer confidence, Thursday

  • G7 Financial Meeting, May 23-25

  • US new home sales and initial unemployment claims, Thursday

  • The Fed’s Rafael Bostic speaks Thursday

  • US Durable Goods, Consumer Confidence, Friday

  • Fed Governor Christopher Waller speaks on Friday

Some key movements in the markets:

Stores

  • S&P 500 futures rose 0.6% as of 2:27 p.m. Tokyo time

  • Nasdaq 100 futures rose 0.9%.

  • Japan’s Topix index rose 0.6%.

  • Australia’s S&P/ASX 200 index fell 0.5%.

  • The Hang Seng Index in Hong Kong fell by 1.7%.

  • The Shanghai Composite Index fell by 1.2%.

  • Euro Stoxx 50 futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • There was little change in the euro at $1.0828

  • There was little change in the Japanese yen at 156.73 to the dollar

  • There was little change in the yuan in external transactions at 7.2556 to the dollar

Digital currencies

  • Bitcoin was little changed at $69,446.54

  • Ethereum rose 0.8% to $3,778.75

Bonds

Goods

  • West Texas Intermediate crude fell 0.7% to $77.06 a barrel

  • Gold in spot transactions fell 0.3 percent to $2,371.72 per ounce

This story was produced with assistance from Bloomberg Automation.

–With the help of Zhou Lin.

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