Market Wraps

Morning Wrap: ASX 200 to rise, Nvidia soars on earnings + Jackson Hole Preview

Thu 24 Aug 23, 8:34am (AEDT)

ASX 200 futures are trading 36 points higher, up 0.50% as of 8:20 am AEST.

The local sharemarket is set to bounce thanks to a strong lead from Wall Street, Nvidia smashes quarterly earnings expectations and CEO declares "a new computing era has begun", PMIs from Europe, US and Australia weaken, what investors should expect at Jackson Hole and which ASX-listed tech stocks benefit from the Nvidia hype?

Let's dive in.

Overnight Summary

Thu 24 Aug 23, 8:34am (AEDT)

Name Value Chg %
Major Indices
S&P 500 4,436 +1.10%
Dow Jones 34,473 +0.54%
NASDAQ Comp 13,721 +1.59%
Russell 2000 1,870 +1.04%
Country Indices
Canada 19,880 +0.96%
China 3,078 -1.34%
Germany 15,728 +0.15%
Hong Kong 17,846 +0.31%
India 65,433 +0.33%
Japan 32,010 +0.48%
United Kingdom 7,321 +0.68%
Name Value Chg %
Commodities (USD)
Gold 1,945.00 +0.99%
Iron Ore 107.47 -
Copper 3.811 +1.42%
WTI Oil 78.56 -1.36%
Currency
AUD/USD 0.6480 0.00%
Cryptocurrency
Bitcoin (AUD) 40,627 +2.68%
Ethereum (AUD) 2,571 +3.93%
Miscellaneous
US 10 Yr T-bond 4.198 -3.00%
VIX 16 -5.83%

US Sectors

Thu 24 Aug 23, 8:34am (AEDT)

Sector Chg %
Information Technology +1.92%
Communication Services +1.90%
Real Estate +1.46%
Industrials +0.99%
Financials +0.93%
Consumer Discretionary +0.83%
Consumer Staples +0.63%
Utilities +0.45%
Health Care +0.29%
Materials +0.18%
Energy -0.30%

S&P 500 SESSION CHART

S&P 500 intraday chart
S&P 500 higher intraday to close near best levels (Source: TradingView)

MARKETS

  • S&P 500 higher and finished near best levels, marking its first gain of 1% or more since 30 June

  • Nasdaq posted its best day since 28 July, led by semis and software stocks

  • Treasury yields ease amid softer-than-expected PMIs from the US and Europe

  • WTI crude settled 1.4% lower but off worst levels after bigger-than-expected draw

  • Nvidia’s better-than-expected earnings brings back AI-hype, shares currently up around 8% in after hours, lifting Nasdaq futures up 2.6% 

  • Global stocks head for worst month in nearly a year (FT)

  • US bond yields surge despite muted inflation, investors look beyond Fed (Reuters)

  • T-Bill yields to climb further with foreign money steering clear (Bloomberg)

  • Higher-for-longer rate debate to dominate Jackson Hole meeting (FT)

STOCKS 

  • Nike posts record streak of losses on China weakness, inventory woes (Reuters)

  • Shell taps Goldman Sachs to explore Singapore refinery sale (Reuters)

  • Peloton shares tumble after reporting wider-than-expected loss (CNBC)

  • Abercrombie & Fitch shares surge after easily beating analyst expectations (CNBC)

NVIDIA

  • Nvidia shares soar as AI giant again smashes expectations (Forbes)

  • Nvidia planning to at least triple production of its H100 AI processor in 2024 (FT)

Nvidia (+3.2%, after hours +7.9%): Massive double beat, Q2 revenue up 101% to US$13.5bn, EPS up 429% to $2.70, approves US$25bn in share repurchases, guides to US$16bn revenue in Q3. 

  • “A new computing era has begun” – CEO Jensen Huang

  • “Strong demand for the NVIDIA HGX platform … was primarily driven by the development of large language models and generative AI.”

  • "During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI."

CHINA

  • Global funds abandon China blue chips in $11bn selloff (Bloomberg)

  • Country Garden leaves investors in dark on exact default deadline (Bloomberg)

  • Pressure to revive economy muddies outlook for China's banks (Reuters)

  • China's faltering growth threatens to derail commodities markets (Bloomberg)

ECONOMY

  • US economy weakens in August as stagnation rears, PMI suggest (WSJ)

  • Eurozone PMI weakest since November 2020 (Bloomberg)

  • UK private sector output falling at fastest rate since January 2021 (Reuters)

  • Japan factory activity shrinks at slower pace in August (Reuters)

  • New Zealand retail sales slump poses downside risk for GDP (Bloomberg)

  • Australian PMI shows cooling economy, but inflation not yet beat (WSJ)

Industry ETFs

Thu 24 Aug 23, 8:34am (AEDT)

Description Last Chg %
Commodities
Silver 22.29 +3.87%
Gold Miners 28.74 +2.83%
Copper Miners 37.31 +1.50%
Uranium 23.5 +1.08%
Lithium & Battery Tech 57.74 +1.05%
Strategic Metals 72.57 +0.37%
Steel 66.07 +0.26%
Industrials
Construction 54.11 +1.31%
Agriculture 21.38 +1.04%
Global Jets 19.29 +0.63%
Aerospace & Defense 115.54 +0.33%
Healthcare
Biotechnology 128.03 +0.58%
Cannabis 6.61 +0.15%
Description Last Chg %
Cryptocurrency
Bitcoin 13.7 +3.09%
Renewables
Solar 56.76 +1.74%
Hydrogen 8.54 +0.83%
CleanTech 12.1 +0.08%
Technology
E-commerce 18.48 +2.24%
Robotics & AI 26.11 +2.11%
Semiconductor 500.16 +2.04%
Cloud Computing 19.81 +1.96%
Electric Vehicles 24.41 +1.67%
Sports Betting/Gaming 17.2 +1.59%
Video Games/eSports 53.61 +1.50%
Cybersecurity 23.93 +1.44%
FinTech 21.09 +1.20%

Deeper Dive

Sectors to Watch: Tech, Tech, Tech

Major US benchmarks are beginning to bounce in a V-shaped fashion. Tomorrow will see Nvidia's surging share price take on whatever Jackson Hole has to throw at markets. There were a lot of strong performing sectors overnight (e.g. Gold, Copper and Uranium) but we're going to talk about tech.

Nvidia smashed earnings expectations as Q2 data centre revenues jumped 171% to US$10.3bn, which could trigger some positive flow for local names such as:

Jackson Hole Preview

The biggest macro event of the week will begin tomorrow night and conclude on Saturday. Here's you might want to pay attention (or at least read the speech back on Monday morning):

  • The Symposium has a good track record of revealing policy shifts at the major central banks.

  • The leaders of the US Federal Reserve, the European Central Bank, and other major economic organisations appear at the event.

  • Whether you like it or not, markets (especially bond markets) have had a history of moving during and after the speeches.

And if nothing else ... it's nice to look at. The place where the Symposium takes place is called Jackson Hole, Wyoming. It's actually a ski resort that also doubles as a luxury resort with a pretty mountain view during the summer - which is when this event is held.

What the analyst community are saying to look out for at this event:

  • "ECB President Lagarde will address the Jackson Hole Symposium on Friday which she is expected to reiterate the ECB is unwaveringly committed to setting appropriate policy to achieve its inflation mandate." - ANZ Economics makes this point that could apply to both Lagarde and Powell. Both central bank governors will say inflation is still too high and they are data-dependent.

  • "In our view, the event is a good opportunity for the chairman to start laying the ground for the next evolution of the Fed's post-COVID policy guidance." - Gennadiy Goldberg, TD Securities says this event is a good chance to look at what's next beyond the end of this rate hiking cycle ... if Powell wants to dare to look that far ahead.

  • "If Powell wants to calm the bond market down, he should acknowledge that inflation has moderated significantly and say that if it continues to do so, the Fed will probably lower interest rates next year." - Yardeni Research says that the end to the bond market's woes will start with any signal of rate cuts. But good luck wishing for that!

  • "Heading into Jackson Hole later this week, Fed Chair Powell's comments on policy could continue to underpin, if not boost, real US Treasury yields," - Vishnu Varathan, Mizuho Bank (Real yields are nominal yields plus inflation. The current surge is the largest and steepest in at least 25 years and is having a big impact on equities because higher real yields tends to encourage investors into safer/cash-like investments.)

What the data tells us:

  • Since 2000, the S&P 500 tends to rise an average 0.4% in the week following the Fed Chair's speech at Jackson Hole. However, hasn't performed quite well during turbulent periods such as the Dotcom bubble, the Global Financial Crisis and pandemic.

image (1)
Source: Bloomberg
  • Markets are bracing for a pullback as some 25 million put options were traded last Thursday, the highest amount since March. The market's put-to-call ratio is also above 1.0 for the first time in almost six months and at the highest level since January. This could reflect a few scenarios:

    • Markets bracing for a pullback

    • Markets hedging risks ahead of Jackson Hole

    • Fuel for a short squeeze to send stocks higher

image (2)
Source: Bloomberg

Key Events

ASX corporate actions occurring today:

  • Trading ex-div: Baby Bunting (BBN) – $0.048, Platinum Asia (PAI) – $0.025, Endeavour Group (EDV) – $0.075, Capral (CAA) – $0.20, JB Hi-Fi (JBH) – $1.15, Regal Asian Investments (RG8) – $0.05, Platinum Capital (PMC) – $0.03 

  • Dividends paid: Dexus Convenience Retail (DXS) – $0.055

  • Listing: None

Economic calendar (AEST):

  • 10:30 pm: US Durable Goods

  • 10:30 pm: Jackson Hole Symposium

Written By

Hans Lee

Content Editor

Hans is a Content Editor at Livewire Markets and Market Index. He created Signal or Noise and helps write the LW-MI Morning Wrap on Tuesdays and Thursdays.

Get the latest news and insights direct to your inbox

Subscribe free