Nvidia Shares Dip 7% After Earnings, Impacting Global Markets

Nvidia shares fell by 7% in after-hours trading despite surpassing profit and revenue expectations, as investors remained cautious about its high valuations. This decline impacted global markets, with Taiwan's TSMC dropping 2% and European indices expected to open lower. Additionally, European inflation data for August will be closely watched, influencing ECB's monetary policy outlook.

Equities

The FTSE 100 ended flat on Wednesday, as gains in the aerospace, defence, and pharmaceutical sectors offset declines in luxury goods and metal mining shares. The index, which had risen for four consecutive sessions prior, saw a sharp 2.8% drop in precious metal miners, marking the largest one-day decline in three weeks. Industrial metal miners also fell by 1.7%, pressured by a stronger US dollar and concerns over demand from China.

Watches of Switzerland Group saw a 3.5% decrease following a downgrade from Exane BNP Paribas, while Burberry dropped 2.2%, dragging down the personal goods index by 2.4%. Conversely, aerospace and defence shares gained 1.5%, with GSK leading the pharmaceutical sector's 0.8% rise after a 2.1% increase in its shares. GSK's gains came as Delaware's highest court agreed to hear an appeal related to the Zantac lawsuits. Meanwhile, Direct Line Insurance rose 1.7% after Citigroup upgraded the stock to "buy," and Kingfisher dropped 1.2% following a downgrade from Citigroup.

In the US, markets closed lower on Wednesday ahead of Nvidia's much-anticipated quarterly report. The S&P 500 declined 0.60%, with the Nasdaq falling 1.12% and the Dow Jones Industrial Average down 0.39%. Nvidia shares, which have surged 154% this year due to AI-driven optimism, fell 2.1% before the report, reflecting investor caution. Other chipmakers also saw declines, with Broadcom and Advanced Micro Devices both losing over 2%. Major tech companies were not immune to the downturn, with Alphabet, Microsoft, and Amazon each shedding about 1%. Super Micro Computer saw a significant drop of 19% after announcing a delay in its annual report, following a short position disclosure by Hindenburg Research.

On a more positive note, Berkshire Hathaway reached a market value of $1 trillion for the first time, with its Class B stock rising by 0.9%. Volume on US exchanges was lighter than usual, with 9.9 billion shares traded compared to the 11.7 billion average of the past 20 sessions.

Forex & Commodities

The New Zealand dollar made gains on Thursday, reaching an eight-month high of $0.6295, following an upbeat business outlook survey showing a sharp rise in confidence. The US dollar struggled to maintain momentum ahead of the core PCE price index release, the Federal Reserve's preferred inflation measure, due on Friday. The dollar index slipped slightly to 100.94, remaining near a 13-month low. The euro moved closer to its 13-month high, trading at $1.1135, while the British pound edged up to $1.3209.

Gold prices fell by 0.8% to $2,505.03 an ounce as a stronger dollar made the metal more expensive for holders of other currencies. Investors are focused on the upcoming US inflation data, which could influence the Federal Reserve's interest rate decisions. Meanwhile, oil prices declined by 1%, with Brent crude settling at $78.65 a barrel and US West Texas Intermediate at $74.52, weighed down by concerns over Chinese demand and a smaller-than-expected draw in US crude inventories. Supply risks from Libya and the Middle East limited further losses.