Nvidia Surges After Huge Swings & Nikkei Hits Record High

Equities

On Wednesday, the FTSE 100 closed 0.7% lower in the wake of a significant drop in HSBC's shares, which fell by 8.4% after the bank reported an unexpected $3 billion charge related to its stake in a Chinese bank. Despite achieving record profit and substantial shareholder payouts, HSBC's largest one-day drop in nearly four years underscores the challenges faced by the Asia-focused lender amidst China's slower-than-expected economic recovery.

Close Brothers Group saw its shares tumble by 8.4% following a downgrade by Fitch, which cited a forecast of weaker profitability and capitalisation in the medium term. Cybersecurity firm Darktrace also witnessed a 5.0% decrease in its share price, impacted by a gloomy forecast from US counterpart Palo Alto Networks. Glencore saw a modest dip of 1.1% after reporting lower earnings due to declining commodity prices.

Across the pond, US markets had a mixed day. The S&P 500 and the Dow Jones Industrial Average both managed slight gains, each up by 0.13%, while the Nasdaq Composite Index fell by 0.32%.

Nvidia, a leading chip designer, saw its shares initially decline by 2.85% during the trading day but surged by over 6% after hours following a revenue forecast that exceeded expectations. This forecast was buoyed by strong demand for its artificial intelligence chips, highlighting Nvidia's prominence in the AI sector.

Palo Alto Networks experienced a dramatic 28.44% drop after its third-quarter billings forecast fell short of analyst expectations, affecting shares of other cybersecurity firms. In a notable development, Amazon.com's stock edged up as the company is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance, which experienced a decline in its shares.

Forex & Commodities

The Federal Reserve's January meeting minutes revealed concerns about the potential risks of premature interest rate cuts, contributing to some weakness in the dollar, which has already been coming off recent peaks.

The British pound rose slightly by 0.11% to $1.2632 following the announcement that Britain achieved its largest monthly budget surplus on record in January, just before Finance Minister Jeremy Hunt is scheduled to present the annual budget in March. Gains were capped since the surplus was less than forecast.

Oil prices gained ground, with US West Texas Intermediate crude advancing by 1.1% to settle at $77.91 a barrel, and Brent crude increased by 0.8% to $83.03 a barrel. This uptick was attributed to the market structure known as backwardation, that points to a tightly supplied market, reinforced by declining crude stocks in key trading hubs.