by Claude Chendjou

PARIS (Reuters) – Major European stock markets are expected to trade cautiously on Thursday, following a decline in Asian markets after Nvidia’s quarterly results disappointed some investors who had been particularly optimistic before the publication.

According to the first available indications, the Parisian CAC 40 should lose 0.05% at the opening. The Dax in Frankfurt could fall by 0.07%. The FTSE 100 in London should, on the other hand, gain 0.10%. The EuroStoxx 50 index is expected to fall by 0.16% and the Stoxx 600 by 0.02%.

Nvidia on Wednesday provided third-quarter guidance that was broadly in line with market expectations, disappointing investors who have bet billions of dollars on the future of artificial intelligence (AI), in which the group is a heavyweight.

Nvidia shares fell 7.6% in after-hours trading on Wall Street and are expected to boost the entire technology sector in Europe, particularly semiconductors, with ASML, STMicroelectronics and Infineon among others.

“Nvidia has become, in some ways, a victim of its own success, with its share price up more than 180% this year,” said Tony Sycamore, an analyst at IG.

“It remains to be seen whether these results mark the end of investors’ strong affinity for the chipmaker,” he added.

On the macroeconomic indicators side, preliminary inflation figures for Germany for August are expected before those for the entire eurozone on Friday.

In the United States, the second estimate of the gross domestic product (GDP) for the second quarter is on the agenda today, as well as the weekly figures for unemployment benefits. These statistics will provide clues on the evolution of the American economy while UBS Global Wealth Management raised during the week the probability of a recession in the United States from 20% to 25%.

The weakening jobs market and the deterioration in recent economic data have led Jerome Powell, the chairman of the US Federal Reserve (Fed), to admit that interest rate cuts are now imminent. Traders are anticipating reductions of 25 to 50 basis points in the federal funds rate after the Fed’s meeting on September 18.

In the eurozone, where the European Central Bank (ECB) is also expected to lower its key rates on September 12, indicators on business climate and consumer confidence, expected at 09:00 GMT, should focus attention.

A WALL STREET

The New York Stock Exchange ended lower on Wednesday ahead of the highly anticipated release of Nvidia’s quarterly results.

The Dow Jones index fell 0.39% to 41,091.42 points.

The broader S&P 500 lost 0.60% to 5,592.18 points.

The Nasdaq Composite fell by 1.12% to 17,556.03 points.

Nvidia, which has surged more than 150% this year, fell 2.1% ahead of its financial results as investors questioned the potential benefits of AI as big spending announcements by Microsoft, Alphabet and others to develop the technology fueled concerns.

Tech giants Alphabet, Microsoft and Amazon also declined, by about 1%.

Among the eleven major sectors of the S&P-500, eight ended in the red, including information technology.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell 0.02% to 38,362.53 points, penalized by semiconductor stocks such as Tokyo Electron (-1.76%) in the wake of Nvidia’s results. The broader Topix gained 0.03% to 2,693.02 points.

The MSCI index of Asia and Pacific stocks (excluding Japan) lost 0.30%, while in South Korea, the Kospi index fell by almost 1%.

Taiwanese subcontractor TSMC, which makes chips for Nvidia, fell 2.18%, dragging down the local market as a whole with a decline of 0.75%.

In China, the Shanghai SSE Composite fell 0.38% and the CSI 300 fell 0.11%, their fourth consecutive session of decline. The indices were particularly affected by the financial sector, which declined 1.62% with Xiamen Bank plunging 6.94%, the bank having reported a 15% drop in its half-year net profit on Wednesday. The disappointing results from Chinese companies underline the fragility of the country’s economic recovery, while UBS on Wednesday lowered its forecast for Chinese GDP growth for this year to 4.6% from 4.9%.

VALUES TO FOLLOW IN EUROPE:

CHANGES/RATES

The dollar fell 0.20% against a basket of benchmark currencies, and is expected to drop 2.9% over the month as a whole, which would be its biggest monthly decline since the beginning of the year. The greenback is suffering from the expected drop next month in key interest rates in the United States.

The euro rose 0.13% to $1.1134, close to a 13-month peak.

The pound is trading at $1.3219 (+0.22%), approaching the peak since March 2022 reached on Tuesday at 1.3269.

The yield on 10-year US Treasury bonds was stable at 3.8369%, after gaining 1.1 basis points the previous day.

The yield on the German Bund of the same maturity is also practically unchanged, at 2.262%.

OIL

The oil market is slightly higher after two sessions of decline as concerns over supply in Libya have returned to the forefront.

Brent rose 0.20% to $78.81 per barrel and US light crude (West Texas Intermediate, WTI) rose 0.31% to $74.75.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR AUGUST 29:

COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS

EZ 09:00 Business climate August nd -0.61

EZ 09:00 Consumer Confidence August -13.4 -13.4*

(final)

FROM 12:00 Inflation (preliminary) August 0.1% 0.3%

-over one year 2.1% 2.3%

USA 12:30 GDP (2nd estimate) Q2 2.8% 2.8%

USA 12:30 Weekly registrations on week 24 232,000 232,000

unemployment august

*first estimate

(Written by Claude Chendjou)

Copyright © 2024 Thomson Reuters