Nvidia’s better-than-expected earnings report triggered a strong relief rally in global stock markets on Thursday. The AI chip giant’s revenue forecast temporarily eased investor concerns about an AI bubble after recent sharp declines. Meanwhile, the dollar index is hovering near a six-month high, with investors watching for delayed US employment data.
Nvidia effect triggers global rally
The rally, which began in Asia’s technology-heavy stock markets, spread to Europe.
Nvidia CEO Jensen Huang dismissed AI bubble concerns with an emphasis on “overdemand,” a sentiment supported by Wall Street’s significantly better-than-expected revenue forecasts.Deutsche Bank strategist Jim Reid stated that Nvidia’s results “completely changed market sentiment.”
European technology indices gained 1.8%, with Infineon and ASML shares rising 2.8%. AI equipment manufacturers such as Schneider Electric and Siemens Energy also increased 2% and 4% respectively.
In Asia, the Nikkei rose 2.6%, the Korean stock market 1.9%, and Taiwan gained 3.2%, with TSMC rising more than 4%. Nasdaq and S&P 500 futures contracts also moved upwards during the day.
Another factor supporting the rise was news that the US might postpone some semiconductor tariffs to reduce tensions with China.
Market stress stemming from Japan is also being monitored. Allegations that Prime Minister Sanae Takaichi is preparing the largest stimulus package since the pandemic led to a sharp sell-off in Japanese bonds, pushing yields to record highs. The yen fell to 157.60 against the dollar, its lowest level in ten months. Experts say that if the weakness continues, a scenario similar to the sharp depreciation seen in the pound in 2022 could occur.
The dollar index rose 0.2% to 100.25. The US 10-year Treasury yield showed a limited increase towards 4.14.
Expectations shifted to delayed US employment data
Investors’ focus is now on the delayed September employment report. The data is expected to shape the likelihood of a Fed rate cut at its December meeting.
The Fed’s October meeting minutes contained cautious messages that a cut could create risks for inflation expectations.
According to CME FedWatch, the probability of a 25 basis point cut at the December meeting fell from 50% to 33% in one day.
The delay is reportedly due to the postponement of the November employment report to December 16. The Euro fell 0.2% against the dollar to 1.1520. Brent crude oil rose slightly to $63.6 ahead of new US proposals regarding the Ukraine war and operational restrictions on Russian oil companies. Cryptocurrencies also saw some buying activity. Bitcoin rose 1.8% to over $92,200, while Ether climbed 1.5% to $3,033.Gold prices continued to fluctuate; spot gold fell 0.4% to $4,064.
