All eyes are on Nvidia, arguably the most important stock in the world at the moment (certainly for the short to medium-term outlook for global equities). Investors are wondering whether Nvidia will once again be able to present its earnings report. The stock looks back on a 12-month performance of 236% (or +40% YTD) – actually in line with fundamentals: The consensus estimate for revenue is $20.54 billion (+239.5% Y/Y).
This is certainly hype, but it's also a growth story. I'm the first to warn about bubbles, but so far the AI hype has been driven not only by euphoria, but also by fundamentals that point to the growth needed for the stock gains we're seeing.
Nvidia is at the center of the AI revolution and has the best performance in the S&P 500 so far this year, having more than tripled by 2023 (and also by far the best performance in the S&P 500 & Nasdaq 100).
We see mixed markets in Europe and Asia. China was able to cut yesterday's losses and started today's trading day very well before giving back some of its strong early gains. The CSI 300 Index (traded in Hong Kong) for mainland stocks rose by 1.4%. Real estate developers led the gains after banks increased financing support for the struggling sector. However, some of the support is sure to be short-lived as renewed tightening of trading by quant funds has also eased concerns over short selling. Other Asian markets were down slightly overall.
Markets in Germany and France were up, but the Euro Stoxx 600 was weighed down by weakness in the UK financial and mining sectors: HSBC slumped more than 7% after reporting an 80% fall in fourth quarter profits. Weak earnings from mining companies Glencore and the world's largest iron ore producer Rio Tinto also weighed.
The markets in New York are slightly down, with technology stocks again leading the losses. Once again, Nvidia and other chips are weighing on Wall Street – Nvidia is currently trading 1.8% lower in pre-market trading after falling 4.4% yesterday. Nvidia will release its earnings report after the NYSE closes. Nvidia's earnings report will be massively important for Wall Street and Big Tech/Chip/AI stocks in particular.
Other notable pre-market stock moves: Palo Alto Networks slumped more than 21% after the cybersecurity company lowered its revenue forecast. Amazon rose 1.1% after replacing Walgreens Boots Alliance in the Dow Jones. Walgreens fell 3%.
We see that yields are still slowly falling, with the yield on 10-year US Treasuries two basis points lower. The USD remained stable.
In commodities, aluminum rose on speculation of further sanctions against Russia, which could lead to supply shortages. On the other hand, iron ore futures reached their lowest level since October after a volatile session in which prices fluctuated between gains and losses. The oil price fell slightly but appears to have found a bottom. The gold price continues to recover from last week's losses, buoyed by falling yields and increased demand for safe havens.
👁 ROB'S MARKET OVERVIEW:
February 21, 2024
🌐/🇺🇸 Global Markets ↘️/↕️ (weak start, then mixed markets, cautious trading before closing / Nvidia report)
Cyclical Stocks ↘️/↕️
Tech/Growth Stocks ↘️/➡️
Financial Stocks ↘️/↕️
Defensive Stocks ➡️/↗️
Energy Stocks ➡️
Materials Stocks ↘️
💱 Forex
AUD ↗️/➡️ (boosted by short-lived China optimism)
EUR ↗️/➡️ (overbought, reduced upside in the near-term)
USD, GBP, JPY, CHF, CAD ➡️
⚒ Commodity Markets ↕️
Oil prices ↘️/➡️ (oil to find support; will try to find support at $77.00 & remains bullish)
Natural Gas prices ↗️/↕️
Metal prices ↕️ (very mixed: Aluminium strong gains; Iron Ore at multi months lows)
Gold ➡️/↗️ (gold & other precious metal with gains as yields edge lower / more safe haven demand)
⚡️Cryptos ↕️ (tries to rebound from some losses yesterday; will find strong support range $50K – $51K).
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert
