Today’s markets: Nvidia creates shockwaves

Today is a positive morning in stock markets worldwide, except in London. Many big companies listed on the FTSE stock exchange have shared their financial results, but the recent earnings report from Nvidia has caused a significant impact on the market with a very favorable update.

The stock market in Europe is doing well, with the Dax rising by 1 percent primarily because of the automotive industry. The Stoxx 600 has also reached a new high, even though Nestle has dropped by 4 percent. However, the FTSE 100 is not doing as well, as it has remained stagnant and is still below the 7,700 resistance level. The Nikkei 225 in Asia has achieved an all-time high, and Asian tech shares have increased considerably after the release of Nvidia's results. Japan is experiencing a positive trend with significant corporate profits, a weak yen, and high demand for chip-making equipment. The Tokyo Stock Exchange has implemented reforms that cause companies to increase shareholder returns. There is a growing trend among the people of Japan to move towards investment rather than saving, which signifies a shift towards a new capitalism drive and a potential move away from deflationary cycle to inflationary. Lastly, the stock market in China is slowly recovering.

Yesterday, there was a slight increase on Wall Street during the trading session. However, the Nasdaq decreased slightly due to the decline of technology stocks led by Nvidia. There was great anticipation for Nvidia's earnings and the stock was expected to experience high volatility - which turned out to be correct. As a result, futures have risen significantly and the SPX is expected to open at a new record high.

This morning, there have been significant earnings reported. Lloyds experienced a decline in shares due to the allocation of £450 million for a car finance investigation by the FCA. Although this may be lower than expected by the market, the results of the investigation are uncertain. Some are concerned about how Lloyds calculated the £450 million, as the worst-case scenario could potentially be in the billions causing skepticism.

Rolls-Royce's shares experienced a significant 8% increase after surpassing its predicted profit for the year. The actual underlying profit it made in 2023 was £1.6bn, which exceeded both expectations and previous guidance of £1.4bn. The company also projected that its profits would continue to rise by 6% this year, exceeding the earlier estimations.

Beazley was the top performer of the FTSE 100, having increased by 9 percent due to an upgrade in guidance. Additionally, the company plans to pay shareholders $300 million following an improvement in its underwriting performance, indicated by an increase in its undiscounted combined ratio from the "low-80s to mid-70s". You can find out more about all of these companies by clicking the link provided.

The futures in the US increased by a lot due to Nvidia's strong earnings report. Before the market opened, the company's shares went up 13%. There was a lot of fluctuation in trading after the market closed as investors tried to make sense of the impressive results. Eventually, they realized that the results were indeed very good and caused the shares to go up by 9%, despite initially dropping by 6%.

The corporation announced that they have reached a significant milestone with their AI technology as their profits skyrocketed by an impressive 265% compared to the previous year, and a 22% increase from the previous quarter. The majority of the profits come from the sales of their Data Centers, which have increased by 409% totaling $18.4 billion, with over half of the sales going to prominent cloud service providers.

The optimistic analysis caused an increase in the stocks of artificial intelligence and semiconductor companies. ARM experienced a surge of 8 percent in after-hours trading, while AMD, ASML, and Infineon saw a rise of 4 percent. Supermicro's stocks went up by 13 percent. For additional information about Nvidia, click here.

In other news, the minutes from the Federal Reserve meeting stated that caution should be taken when deciding to loosen policy and decrease interest rates. It was also mentioned that reducing rates should not be done until there was more certainty that inflation was progressing towards a consistent 2% increase.

Last but not least, there are rumors that the UK Chancellor is contemplating the idea of offering 99% mortgages – what potential problems could arise from this decision?

Neil Wilson, who is the chief market analyst at Finalto, is the author of The Trader.