Marketmind: Markets wait on Nvidia, Fed minutes

By Thomson Reuters Feb 20, 2024 | 11:32 PM

A look at the day ahead in European and global markets from Ankur Banerjee

Investors are holding their breath for perhaps the most influential earnings in a long while, with the poster child of the AI boom, Nvidia, set to report another blockbuster quarter.

And yet investors, who have seen the stock skyrocket in the past 18 months on the back of AI frenzy, may still be disappointed if the chipmaker is unable to maintain its astonishing growth.

The spotlight, perhaps not as brightly, will also be on the minutes of the U.S. Federal Reserve’s meeting in January as traders try to predict the start of the monetary easing cycle.

But with data last week showing inflation refusing to slow significantly, some of the comments from central bankers may already be outdated. Market participants have scaled back expectations for early and steep interest rate cuts and now anticipate June to be the starting point of the easing cycle.

The economic calendar in Europe during the day is sparse, with euro zone consumer confidence flash for February the only major report expected, while earnings from Glencore will be the main corporate event.

That’s likely to keep investors on tenterhooks as Europe’s benchmark stock index remains on the cusp of a record peak. The continent-wide STOXX 600 is up 3% for the year and is stalking the all-time high it touched in January 2022.

Asia market watchers are used to the waiting game as the Nikkei continues its stumbling charge towards its record peak set in 1989. Japanese shares fell on Wednesday partly due to nervousness ahead of Nvidia earnings.

Nvidia, which is replacing Tesla as Wall Street’s most-traded stock by value, is widely expected to more than triple quarterly revenue to roughly $20 billion, with the focus on its forecast and what it says about China. Still, there are worries among investors whether its eye-popping rally has run its course.

The third most-valuable U.S. company, behind Microsoft and Apple, has seen its stock soar 40% this year after rising an astonishing 239% in 2023.

Nvidia options are pricing a swing of about 11% in either direction following earnings and that could well determine how global markets behave in the near term and whether we see record peaks from Europe and Japan shattered this week or not.

Key developments that could influence markets on Wednesday:

Events: euro zone consumer confidence flash for February, Glencore earnings

(Editing by Christopher Cushing)