Chipmakers rally as Nvidia invests $5B in Intel

General market commentary

Global equity markets surged on Thursday, fuelled by optimism around monetary easing and resilient investor sentiment following the Federal Reserve’s latest 25 basis point rate cut. Wall Street set the pace, with the S&P 500, Dow Jones and Nasdaq all closing at fresh record highs, while the Russell 2000 small-cap index broke through to an intraday all-time peak for the first time since late 2021. Technology shares provided a strong tailwind, led by a sharp 22% rally in Intel after Nvidia announced a $5 billion investment to co-develop chips, which also lifted Nvidia’s own shares. European and Japanese equities followed suit with solid gains, while Chinese equities underperformed, reflecting ongoing domestic economic concerns. The upbeat tone helped MSCI’s world equity index briefly touch a new peak, underscoring the breadth of the global equities rally.

Bond markets saw further selling pressure after the Fed meeting, with the U.S. 10-year Treasury yield climbing above 4.10% and eurozone benchmark Bund yields also edging higher. Currency markets favoured the dollar, which gained against the yen, euro, sterling and Swiss franc, as investors adjusted to the shifting interest rate outlook. Central bank developments in Europe added further nuance, with the Bank of England leaving rates unchanged but slowing the pace of its balance sheet unwind. Against this backdrop, investor focus remains fixed on labour market signals and inflation trends, which are likely to shape the Fed’s next moves and set the tone for markets in the months ahead.

Latest market and economic update

Asian equity markets were broadly positive on Friday, following Wall Street’s record closes. Japan’s Nikkei 225 and TOPIX both hit fresh all-time highs ahead of the Bank of Japan’s expected rate hold, while China’s chip shares extended gains despite regulatory restrictions. Hong Kong and Australia rose modestly, South Korea slipped, and Indian futures remained largely unchanged.

US equity futures rose overnight after record closes on all major indexes, boosted by the Fed’s 25 basis point rate cut. Technology, industrials and communication services led gains, with Intel, Nvidia and CrowdStrike among top movers, while markets focused on Fed guidance amid a quiet economic and earnings calendar.

European equities closed sharply higher on Thursday, boosted by strong gains in the tech and industrial sectors. ASML led technology shares with a 7.7% rise, while SAP, Infineon and Nokia added 2–5%. Industrial firms Schneider, Safran and Wolters Kluwer also advanced 2–6%, as investors digested the Fed’s rate cut and the Bank of England’s steady policy stance.

The dollar index stabilised around 97.4 on Friday after two days of gains, supported by the Fed’s cautious stance and falling U.S. jobless claims. Markets digested the central bank’s recent 25 basis point cut and projections for further easing. The euro-dollar pair traded near 1.1790, reflecting a firmer greenback amid mixed global central bank actions.

Oil prices edged higher in Asian trade this morning, with Brent at $67.53 and WTI at $63.31, though weekly performance remained muted amid concerns over slowing U.S. demand and a potential supply glut. Prices were supported by Russia–Ukraine tensions and resumed Kazakh exports, but pressured by a firmer dollar and rising U.S. inventories, keeping markets largely rangebound.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Nvidia will invest $5 billion in Intel, acquiring roughly 4% of the company and triggering a 23% share surge. The collaboration focuses on jointly developing PC and data centre chips, integrating Intel CPUs with Nvidia AI GPUs for faster communication. Analysts say the pact transforms Intel’s AI position, posing competitive pressure on TSMC, Broadcom, and AMD.

CrowdStrike set a $20 billion annual recurring revenue (ARR) target for fiscal 2036, implying 15% compound annual growth rate (CAGR), and guided fiscal 2027 net new ARR growth of 20%, exceeding consensus. Fiscal 2027 ARR is projected at $6.32 billion, with EBIT margins above 24% and free cash flow over 30%. KeyBanc raised its price target to $510, maintaining Overweight.

Google has launched its biggest Chrome upgrade, integrating AI-powered Gemini to enhance browsing. Available to U.S. desktop users, Gemini can clarify web content, work across tabs, and link with apps like Calendar and Maps. Upcoming features include task automation, webpage recall, AI search mode, scam detection, and one-click password updates for supported sites.

Novo Nordisk’s experimental Wegovy pill matched injectable results in a 64-week trial, with participants losing an average 16.6% of body weight, over a third losing 20%+, versus 2.7% for placebo. Oral semaglutide also improved cardiovascular risk factors, activity levels, and reduced intrusive food thoughts, providing a convenient alternative to injections.

FedEx beat Wall Street estimates with quarterly profit of $912 million and revenue of $22.24 billion, supported by cost-cutting and stronger domestic deliveries despite weaker international volumes after the U.S. ended low-value tariff exemptions. Shares rose 5.5% in after-hours trading, though 2026 earnings guidance was slightly below analyst expectations.

Morgan Stanley sees PayPal’s Google partnership as strategically positive but unlikely to boost near-term earnings. It integrates PayPal’s checkout across Google products and uses Google AI to enhance services, with gradual growth expected in processing share and infrastructure, while meaningful financial impact is likely only in the medium term.

Wolters Kluwer shares rose over 5% after the company accelerated its €1 billion share buyback to complete by November and reaffirmed its 2025 outlook. Organic growth showed slight improvement in July–August, led by Tax, Health, and Corporate Performance & ESG divisions. Barclays and Kepler Cheuvreux maintain positive ratings with price targets of €175–€183.

Piper Sandler raised price targets for Alphabet to $285 and Reddit to $290, maintaining Overweight ratings. Strong advertising trends, alongside Alphabet’s favourable antitrust ruling, support multiple expansion, while Reddit benefits from rising ad engagement, promising product momentum, and potential upside from data licensing well beyond current Street estimates.

RBC Capital Markets upgraded Nike to Outperform with a $90 target, citing stronger 2026 growth prospects. Key drivers include revenue recovery, product innovation, revamped leadership, and the 2026 FIFA World Cup, which could add $1.3 billion in sales. Marketing spend and refreshed footwear and sports lines support margin recovery and long-term earnings growth.

BTIG rated Abercrombie & Fitch Buy with a $120 target, highlighting strong post-pandemic sales and expansion potential for Hollister and international markets. American Eagle received a Neutral rating, with its core brand mature, growth limited, and margin gains partly from one-off factors, leaving near-term upside constrained in a challenging consumer environment.

Bernstein initiated coverage of Deckers Outdoor with an Underperform rating and a $100 target, citing peak growth for Hoka and Ugg. Hoka faces slowing U.S. running sales and rising competition, while Ugg’s brand momentum cools. Margins are expected to decline, and medium-term earnings growth is forecast at 7%, well below prior highs.

Upcoming data and events

There are no major economic releases or company earnings due for today.

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