Business Maverick

Business Maverick

US futures gain on Nvidia, dollar holds rally: markets wrap

US futures gain on Nvidia, dollar holds rally: markets wrap
Nvidia headquarters in Santa Clara, California, US, on Thursday, 15 February 2024.

US equity futures rallied following upbeat earnings from Nvidia released after the New York close, which reinforced optimism for the global artificial intelligence boom.

Nvidia said second-quarter revenue will be about $28-billion, beating analysts’ estimates. The company also announced a 10-for-1 stock split and boosted its quarterly dividend by 150% to 10 cents a share. S&P 500 and Nasdaq 100 futures both gained after Nvidia’s results sent its shares as much as 7% higher in after-hours trading.

“Even in the face of huge expectations, the company once again stepped up and delivered,” said Ryan Detrick at Carson Group, who highlighted strong data center revenue.

A gauge of semiconductor manufacturers in Asia climbed to its highest since February 2021, taking its lead from Nvidia’s results.

Still, stock benchmarks declined in Australia, South Korea, China and Hong Kong, while those for Japan gained. The dollar was little changed in Asia, after rising for three straight days.

Treasuries traded in a narrow range after a Wednesday drop pushed shorter-maturity yields higher. The selling sent the policy-sensitive two-year yield four basis points higher as the latest Federal Reserve minutes showed officials remained in no rush to cut rates.

“Many” Fed officials expressed uncertainty over the degree to which policy is restraining the economy — but the minutes also noted policy “was seen as restrictive.” 

“I felt the signals from FOMC reinforcing the likelihood of higher rates for longer is negative for most Asian currencies and thus capital markets,” said Abrdn investment director Xin-Yao Ng. “It’s the currency effect.”

In currencies, a gauge of dollar strength held a rally from the prior session, when it touched a one-week high. The yen was little changed after falling against the greenback to the lowest level since late April. The People’s Bank of China cut its yuan fixing to the weakest level since January.

New Zealand’s dollar rose after Reserve Bank Governor Adrian Orr said the central bank doesn’t want to risk a blowout in inflation expectations. Bank of Korea left its key interest rate at 3.5%.

A busy day of economic reports in Asia includes inflation figures for Singapore, price expectations for Australia and China’s April Swift payments data. Markets in Indonesia are closed. Singapore’s gross domestic product rose slightly in the first quarter compared with a year earlier, beating estimates.

Tech profits

US tech earnings have been among the strongest in the first-quarter reporting season, with revisions in the sector outpacing the rest of the market. However, earnings results also suggest a broadening market, according to Solita Marcelli at UBS Global Wealth Management.

“We stay positive on the AI trend and maintain our preference for big tech given the advantageous market positions,” she said. “We forecast global tech earnings growth of 20% and 16% this year and next, respectively, led by the semiconductor sector where we see investment opportunities.”ed.

Goldman Sachs CEO David Solomon said he currently expects the Fed won’t cut rates this year amid an economy that’s proved more resilient thanks to government spending.

Gold edged higher after suffering its largest one-day decline since April on Wednesday. The precious metal dropped 1.7% to around $2,379 following the Fed’s meeting minutes that indicated rate cuts may come later than previously expected. West Texas Intermediate slipped Thursday, on track for its fourth-consecutive daily decline. Copper prices fell sharply on signs of weakening demand.


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