Nvidia delivered strong results but market reaction was muted, with share moves driven more by options expiries than fundamentals. The AI theme remains supportive, while September seasonality poses a known weakness for stocks. US Q2 GDP rose 3.3% year‑on‑year, exceeding the advance estimate and reinforcing optimism about growth. Home sales and unemployment claims fell, with labour supply tightening and nonfarm payrolls looming as a near‑term Fed consideration. The dollar weakened in August amid expected rate cuts and political concerns. The upcoming US PCE inflation report is the key release that could alter market rate expectations.
So, we were braced for Nvidia earnings and it didn't actually amount to a hill of beans - the results were great, traders picked a couple of holes in the numbers for China and data centres, shares fell a touch mainly on options expiries than any real shift, and the broad market hit a fresh record high as US GDP beat expectations, nullifying lingering recession concerns.
The AI bandwagon remains on the trail - it's not time to circle the wagons yet. September is usually the weakest month for stocks in the US, but the economy is chugging along and an interest rate cut is expected soon. What could go wrong? At the open, the FTSE 100 traded down a touch to retest 9,200 having failed to make the move past 9,300 stick.
Q2 US GDP rose +3.3% YoY which is an increase on the advanced reading of +3% and topped average estimates. Home sales and unemployment claims fell. This is probably the key for the Fed before September with next week's nonfarm payrolls report. As noted previously, does it really matter if hiring is slowing when the labour supply is rapidly falling?
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