Morning Bid: Market held in thrall ahead of Nvidia numbers

A look at the day ahead in European and global markets from Tom Westbrook

Nvidia is holding the investment world in thrall ahead of an earnings report later today that, even if it delivers the expected doubling of second-quarter revenue, may not satisfy investors accustomed to market-moving outperformance.

The chipmaker’s market value was around $390 billion on the eve of the launch of artificial intelligence (AI) chatbot, ChatGPT, less than two years ago.

Now it is nearly $3.2 trillion, and in June it swaggered, briefly, to a turn as the most valuable company on earth, powered by chips that provide the hardware behind the AI computing boom.

Sheer size and its position as an industry bellwether mean its earnings, due after the U.S. close on Wednesday, can move the entire market.

Trade in Asia was light and moves modest ahead of the release, and European equity futures were flat.

Europe’s data and reporting calendar is mostly bare, with Eurozone broad money growth seen rising to 2.7%, while markets are focused on Nvidia’s results ahead of European and U.S. inflation measures due later in the week.

Options prices show traders have braced for a near 10% swing in Nvidia’s shares when they trade on Thursday, translating in dollar terms to more than $300 billion in market value – likely the largest ever market move on an earnings report.

That would dwarf the market capitalisation of 95% of S&P 500 constituents, according to LSEG data, and probably send shockwaves through the global semiconductor sector.

Elsewhere, sterling sat near a 2-1/2 year high on Wednesday as one of the biggest beneficiaries of a slide in the dollar. Traders anticipate about 100 basis points of U.S. interest rate cuts this year against only 40 bps in Britain.

As the markets await Nvidia’s turn at centre stage, fans of Oasis, which signed its first record deal in 1993 just a few weeks after Nvidia’s founding, can join the scramble for Mancunian hotel rooms after the announcement of planned Oasis reunion shows next year.

Key developments that could influence markets on Wednesday:

Earnings: Nvidia

Economics: Eurozone M3 growth, French unemployment

(By Tom Westbrook; Editing by Edmund Klamann)

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