Investors are biting their nails as anticipation runs high on Nvidia, the AI stock kingpin that prepares to unveil its earnings. Analysts project record revenues of $20 billion, supported by crazy demand for generative AI chips in data centres and by tech giants like Meta, Microsoft, and Amazon. Nvidia's strategic partnerships and technological prowess position it favourably despite strong competition, although its valuation might seem outlandish. The call's outcome holds immense weight, shaping not just Nvidia's future but also the broader narrative of AI innovation and market dynamics, especially as the majority of market performance came from only seven stocks.
EQUITY
U.S. stocks were lower on Tuesday, with the Nasdaq showing the largest weakness as chipmaker Nvidia pulled down ahead of its highly anticipated earnings report, with many betting on puts, while gains in Walmart kept losses on the Dow Industrials in check after it forecast fiscal 2025 sales largely above Wall Street expectations and raised its annual dividend by 9%. Capital One's purchase of Discover Financial for over $35 billion pushed the DFS stock price 12.6% higher.
GOLD
Gold climbed higher for the fourth session, supported by a weakening dollar, safe-haven buying ahead of the Fed minutes, and an inflated equity valuation. The greenback's decline makes bullion more attractive for overseas buyers, in addition to escalating tensions in the Middle East. All eyes are on the Fed minutes for cues on the timing of potential interest rate cuts.
OIL
Crude prices slipped 1% even as the dollar weakened after a higher projection of non-OPEC oil trades, especially between Russia and India, which saw a 25% increase in imports. Continued escalation in the Red Sea saw a Greek-flagged vessel attacked by Houthi militias that fortunately arrived safely in Aden, Yemen, where it unloaded part of its cargo. Demand reached a new high in December 2023, led by Asian growth despite declines in the US and Europe.
CURRENCY
A dovish China sent shockwaves through the currency market, weakening the dollar and boosting riskier assets while the yuan soared on hopes of additional stimulus. The euro and sterling gained on still dovish central bank stances in Europe and the UK. Yen remained vulnerable, hovering near 11-week lows as authorities refrained from intervention despite renewed weakness. FOMC minutes will be crucial to currency movements this week.
