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Market Insights

Nvidia earnings, FOMC minutes steal the spotlight

Nvidia, delivering exceptional performance. Mention of Nvidia earnings.
  • Nvidia earnings today in focus
  • Inflation in the United Kingdom remains elevated initially boosting GBP/USD
  • Renewed USD strength places pressure on commodities and indices

Nvidia has stolen the spotlight this week as the tech giant, leader in Artificial Intelligence (AI) and the largest chipmaker prepares to release its Q1, 2024 earnings. Given Nvidia's prominent position in the tech sector, Nvidia’s earnings are crucial for understanding the momentum in AI and gaming sectors, both of which have broader implications for tech adoption rates and semiconductor industry trends.

With the company currently ranking as the third largest company in both the SPX 500 and the US 100, its earnings have historically played a major role in driving prices for these indexes and industry related assets. 

For the SPX 500, Nvidia accounts for 5.24% of the index and 6.37% of the US 100. As the Trillion dollar company prepares to release its Q1, 2024 earnings, a lot of the focus will also be on the growth forecast for the next quarter.

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Currently, the stock is up over 3% this week, contributing to the recent record highs set by the SPX 500 and US 100 earlier this week. But after five consecutive quarters of smashing both earnings per share (EPS) and revenue, the report that is scheduled for release after US market close is imperative. 

Looking at the daily chart below, Nvidia has maintained the strong bullish momentum that has persisted since 2022. At the time of writing, it is up 92.615% YTD and 800% higher since the October 2022 low.

Nvidia daily chart (January - May 2024)

nvidia-daily-chart-jan-may-2024-us.png

Chart prepared by Tammy Da Costa using TradingView

Here’s what to expect:

upcoming-earnings-us.png

Although this has been a significant driving force for the US stock indices this week, another important factor to consider, particularly for assets correlated with USD, is the FOMC meeting minutes, due 18:00 UTC. This release is expected to provide more insight into the potential trajectory of the Federal Reserve. With inflation and employment slowing last month, commentary from Fed speakers has caused mixed reactions from market participants. However, at the time of writing, the probability of a rate cut is only anticipated for September but any changes in the narrative could add to volatility and price moves.

target-rate-probabilities-for-18-sep-2024-fed-meeting-us.png

Meanwhile, for GBP/USD, inflation data released this morning showed price pressures declining slower than anticipated, raising expectations of the Bank of England (BoE) maintaining the current level of interest rates for a longer period. Initially, GBP/USD jumped before peaking at 1.27605. Since then, the major currency pair has pulled back, with prices currently trading around the level of 1.2716. 

GBP/USD daily chart (Feb - May 2024)

gbp-usd-daily-chart-feb-may-2024-us.png

Chart prepared by Tammy Da Costa using TradingView

A stronger USD has also weighed on commodities and crypto that are taking strain today. However, the combination of Nvidia earnings and FOMC meeting minutes could definitely contribute to driving price action for the remainder of the week.

Below is a snapshot of current prices of major players in financial markets, provided by Bloomberg.

major-players-in-financial-markets-us.png

Not investment advice. Past performance does not guarantee or predict future performance.

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