Nvidia, the market reaction and USD/JPY

Kathleen Brooks XTB UK

The market reaction to Nvidia’s results has been tepid and below average compared to the last 8 quarters. In the pre-market, Nvidia’s share price is higher by 2.5%, less than the 5% average move in the stock after its earnings report in the last 8 quarters. Considering the results were strong, what is holding back the stock price?

A quick recap on Nvidia’s numbers: revenues for Q4 were $39.3bn, the forecast for Q1 is $42.8bn. Net income was $22.9bn, and analysts expect net income to rise to $31bn in this quarter. There is a strong pipeline of demand for Blackwell chips, and even though gross profit margin was a touch weaker than expected, the company said this was temporary while it scaled up Blackwell chip production.

The share price is higher by 2.5% in the pre-market, after catching a bid ahead of the US open, however, it is still lower by 3% YTD.

The reason why Nvidia may not be rallying like it used to could be a problem for the entire Magnificent 7. The Magnificent 7 group of US tech stocks peaked in December last year, around the same time as USD/JPY reached a peak. So, why has a strengthening yen had an impact on the Magnificent 7 and on Nvidia? The yen has risen by 5% vs. the USD so far this year, which is a sign that money is moving from West to East, which is weighing on US stocks and boosting Asian indices, in particular tech stocks. DeepSeek’s arrival signifies that China is a force to be reckoned with when it comes to AI capabilities, and this is also knocking sentiment for US tech stocks, it could also limit the upside for Nvidia’s stock price after this solid earnings report.

Chart: Magnificent 7 and USD/JPY

Source: XTB and Bloomberg

The Magnificent 7 has had a depressed start to the year, at the same time Eastern tech stocks have surged. The Golden Dragon index, the US-listed index of Chinese tech firms, has outperformed the Nasdaq this year. Added to this, the Hang Seng, the Hong Kong index, is up by 18% YTD in USD terms, while the Nasdaq is down by 1.2% YTD. To conclude, if you want to know where US tech giants go next, follow USD/JPY.

Author

Kathleen Brooks

XTB UK

Kathleen has nearly 15 years’ experience working with some of the leading retail trading and investment companies in the City of London.

EUR/USD hovers around nine-day EMA above 1.1800

EUR/USD remains in the positive territory after registering modest gains in the previous session, trading around 1.1820 during the Asian hours on Monday. The 14-day Relative Strength Index momentum indicator at 54 is edging higher, signaling improving momentum. RSI near mid-50s keeps momentum balanced. A sustained push above 60 would firm bullish control.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold sticks to gains above $5,000 as China's buying and Fed rate-cut bets drive demand

Gold surges past the $5,000 psychological mark during the Asian session on Monday in reaction to the weekend data, showing that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Federal Reserve expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.