Sentiment is positive in the equity space; Asia-Pac shares caught a bid overnight on lower oil prices and easing bond yields, following a modestly positive close for US cash benchmarks yesterday. I expect cautious action in stocks ahead of Nvidia’s earnings report after today’s market close. I don’t think it is a question of whether Nvidia beats estimates anymore; it’s whether the company beats expectations by ‘enough’ to satisfy investors and keep the AI trade moving higher. Of interest, Tuesday saw the stock snap a seven-day losing streak – its longest since late 2022.
The company’s guidance points to about US$91 billion in revenue and 75% gross margins, implying 90-99% annual growth. Given the stock’s historical performance around earnings, revenue could come in higher – I am looking at around US$93.5 billion, or approximately 100% annual growth. Nvidia has topped its own targets by about 3% almost every quarter for years, a pattern that has repeatedly forced Wall Street to raise its long-term revenue and earnings assumptions.
FX & Bonds: CAD Lower, AUD Higher & Yields Lower Across the Curve
In the FX space, the CAD continues to trade on the back foot against the USD. The trade war between the US and Canada is clearly heating up, with Canada announcing dollar-for-dollar retaliation. What the US will do now is the question – will we see a retaliation-for-retaliation scenario? The AUD was also in the spotlight overnight, following better-than-expected Australian CPI inflation – both at the headline and trimmed-mean levels.
For bonds, US Treasury yields were lower across the curve amid the fall in oil and, of course, the implications of US Treasury Secretary Scott Bessent’s recent plans for bond intervention.
US PCE Inflation Numbers on Deck
12:30 pm GMT welcomes the July US PCE price index. Forecasts heading into the event suggest the YY headline number will ease to 3.6% from 3.7% in June (est. range between 3.7% and 3.5%), bringing PCE in line with the Fed’s latest projections by year-end. The YY core reading is expected to remain unchanged at 3.3% (est. range between 3.3% and 3.2%), which is also in line with the Fed’s end-of-year projection.
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