Joshua Mahony MSTA
Scope Markets
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Mixed affair in Europe.
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Commodities help drive FTSE 100 underperformance.
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Nvidia earnings to dominate market sentiment.
A mixed start for European equities has seen the FTSE 100 lag behind its mainland peers, losing traction thanks to weakness seen throughout the mining and energy sectors. This comes in response to a dour start to the day across the commodities space, with crude, gold, silver, copper, palladium, and natural gas all heading lower. In part this is a case of giving back their recent gains, with markets becoming increasingly cautious that any recent gains may be unjustified in the event of a Nvidia-led reversal. In a week that sees the crucial core PCE inflation gauge released, it will instead be the release of Nvidia earnings after the bell today that will likely provide the key driver of sentiment for global markets. With over 96% of the S&P 500 having reported their second quarter earnings, today’s Nvidia announcement provides the last major hurdle for markets to overcome if they are to continue on the upward trajectory that has regularly led indices into fresh highs.
The fear coming into this earnings report is the unforgiving nature of market expectations, with the company priced for perfection. Markets will want to see the already incredible pace of growth maintained or bettered, despite the fact that such expansion is quite clearly unsustainable. Any signs that Nvidia’s growth may have peaked could yet cause widespread losses for equities, providing a potential sign that the AI trade has started to ease off. Nonetheless, it takes a brave person to bet against this incredible company, with Nvidia having beat earnings estimates on each of their last six quarters. The rampant AI spending seen throughout the tech sector provides a tailwind that shows no signs of stopping thus far, and markets will be crossing their fingers for another bumper earnings report that keeps the gravy train going for the time being.
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