Nvidia earnings spark little cheer

General market commentary

US equity markets ended higher on Wednesday in a relatively quiet session, with the S&P 500 closing at a fresh record high while the Nasdaq remained 1.3 per cent below its earlier peak this month. European equities were weaker earlier in the day, while Japan’s Nikkei saw modest gains and Indian equities dropped 1 per cent after Washington doubled tariff rates on imports from the country. In bond markets, shorter-dated US Treasuries rallied, pushing two and ten-year yields two basis points lower, while the long end underperformed as political pressure on the Federal Reserve continued. The dollar was little changed against a basket of currencies, while both oil and gold prices advanced.

Investor attention was firmly on technology, particularly Nvidia, which released results after the closing bell. The company projected stronger-than-expected revenue for the coming quarter on robust demand for its artificial intelligence chips, though its shares fell in extended trading. AI remains the dominant market theme, with Microsoft rising nearly 1 per cent while Meta slipped around 1 per cent. Other movers included MongoDB, which surged 38 per cent after lifting its profit outlook, and J.M. Smucker, which dropped more than 4 per cent after disappointing earnings. Despite political uncertainty surrounding the Federal Reserve, investors remain focused on corporate earnings and the durability of the AI-driven rally.

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Asian equities were mixed this morning as investors weighed Nvidia’s results. Japan’s Nikkei and South Korea’s KOSPI gained, while Taiwan’s TSMC and Foxconn slipped. Hong Kong’s Hang Seng lagged, dragged by losses in Meituan and rivals, whereas China’s CSI 300 and Shanghai Composite outperformed. Elsewhere, Australia was flat and Singapore and India saw modest gains.

US equity futures edged lower overnight after Nvidia slid 3.1% in extended trade despite topping earnings forecasts, as data centre revenue disappointed and Chinese chip sales were excluded from guidance. The decline weighed on peers AMD, Broadcom and TSMC. Analysts said the AI-driven rally remained intact.

European equities edged higher yesterday, with the Stoxx 50 and Stoxx 600 ending up after recent losses. France’s CAC 40 rose 0.4% as political concerns lingered. Chipmakers including ASML gained ahead of Nvidia’s results, while mining and consumer shares outperformed. Chemicals lagged, Givaudan slipped on leadership news, and Deutsche Bank and Commerzbank fell after downgrades.

The dollar index steadied near 98.1 on Thursday as traders raised bets on a September Fed rate cut, with odds climbing to 89%. Dovish signals from policymakers and political pressure on the central bank weighed on sentiment. The dollar slipped against the euro, which strengthened to 1.1648 despite political uncertainty in France.

Oil prices slipped in Asian trade this morning despite a larger-than-expected US crude stock draw, as investors weighed fading seasonal demand and new US tariffs on India. Brent fell 0.5% to $67.71 and WTI 0.6% to $63.80. While inventories tightened, concerns over weaker post-summer consumption and geopolitical risks around India and Russia pressured sentiment.

Equities on the move

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

Nvidia beat quarterly earnings and revenue forecasts but fell short on data centre sales as US restrictions curbed H20 chip shipments to China, sending shares down 3.1% after hours. The firm guided Q3 revenue above expectations at $54 billion but excluded China sales, citing ongoing uncertainty. Analysts noted guidance lagged lofty forecasts despite strong AI-driven demand.

CrowdStrike posted stronger-than-expected second-quarter results, with revenue up 21% to $1.17 billion and adjusted profit of 93 cents per share, but guided weaker Q3 revenue of $1.21–$1.22 billion, slightly below forecasts. Shares fell over 4% after hours as incentives tied to last year’s outage and $51 million in related costs continued to weigh on growth.

Snowflake raised its fiscal 2026 product revenue forecast to $4.40 billion, citing strong enterprise demand for AI and data analytics services, sending shares up 13% in after-hours trade. Q2 product revenue of $1.09 billion met estimates, while remaining performance obligations grew 33% to $6.9 billion, driven by AI adoption and growth across Microsoft Azure and EMEA markets.

Abercrombie & Fitch raised its 2025 sales forecast to 5–7% growth, supported by strong demand for Hollister dresses and denim, despite price hikes. Higher tariffs on countries including Vietnam and India will add $90 million in costs, but inventory management aims to cushion the impact. Q2 revenue of $1.21 billion and adjusted profit of $2.32 per share exceeded estimates.

Meituan shares slumped 11.2% in Hong Kong Thursday after a 97% profit drop to 365 million yuan, far below estimates, as fierce competition hit its core food delivery unit. Revenue also missed forecasts. Heavy promotions and rising costs pressured margins, while rivals Alibaba and JD.com also fell, dragging the Hang Seng index down over 1%.

Porsche has begun seeking a successor to CEO Oliver Blume, likely ending his dual role at Porsche and Volkswagen. Shareholders have voiced governance concerns, though family support continues. Talks are under way as Porsche restructures amid weak China demand, profit pressures and challenges in its shift to electric vehicles.

China is seeking to triple AI chip output by 2026 to cut reliance on Nvidia, the Financial Times reports. Huawei aims to start AI chip production this year, with two more plants in 2026, potentially exceeding SMIC’s current capacity. SMIC, Huawei’s key partner, will double 7nm output next year as Beijing pushes domestic AI chip development.

Lockheed Martin plans to have Rheinmetall produce ATACMS and Hellfire missiles at Unterluess, extending their 2024 cooperation. Lockheed will supply technology, Rheinmetall will manufacture and sell in Europe. NATO and German officials will visit the site for a new artillery production line.

Boeing is delivering 25 Ryanair MAX 8 jets by October, earlier than planned, boosting capacity and enabling lower fares, CEO Michael O’Leary said. Despite July strike cancellations, bookings remain strong, with fares expected to recover. Ryanair awaits FAA certification for MAX 7 and MAX 10, while O’Leary criticised French air traffic strikes.

Abercrombie & Fitch raised its 2025 sales forecast to 5–7% growth, supported by strong demand for Hollister dresses and denim, despite price hikes. Higher tariffs on countries including Vietnam and India will add $90 million in costs, but inventory management aims to cushion the impact. Q2 revenue of $1.21 billion and adjusted profit of $2.32 per share exceeded estimates.

Rio Tinto’s new CEO Simon Trott has reorganised the miner into three core divisions—iron ore, aluminium and lithium, and copper—to simplify operations and cut costs as commodity prices weaken. Borates and titanium will undergo strategic review, while the Chief Executive Australia role is being scrapped during the transition.

Morgan Stanley said Amazon Web Services could exceed 20% growth in 2026 as capacity expansion aligns with rising demand, particularly from generative AI workloads. The bank sees AWS as central to Amazon’s valuation, raising its base case to $300. While AWS lags Azure in capital intensity, spending is rising and expected to support faster growth.

UBS analysts say Nike’s turnaround is underway under CEO Elliott Hill, with improvements in franchise management and strategic direction supporting operations and culture. However, they expect it will take at least a year for changes to drive sustainable revenue growth. The equity retains a Neutral rating, with a 12-month price target of $63.

HSBC upgraded Eli Lilly to Hold from Reduce, raising its target price to $700 as its bear case fades and risk-reward balances. The bank cited stronger estimates, clearer prospects for oral GLP-1 drug orforglipron, and disciplined pricing. Revenue is forecast to reach $80 billion by 2027, though risks include competition and regulatory restrictions.

HSBC upgraded Amer Sports to Buy, citing strong global growth, retail expansion, and product diversification. Arc’teryx, Salomon, and Wilson are expanding stores across key markets, with Investor Day on 18 September expected to provide long-term guidance and detail Arc’teryx’s global roll-out strategy.

Upcoming data and events

Markets face a busy session today with key US economic releases, including GDP, Initial Jobless Claims, and Pending Home Sales. Earnings continue with reports from tech leaders Dell, Marvell Technology, and Autodesk, alongside retail names Best Buy and Dollar General.

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