Nvidia's stellar performance ignites Asian markets

Amid supply reassurances and earnings triumph, Nvidia sparks market rally in Asia

By Ahmed Azzam | @3zzamous | 24 August 2023

Market open
  • Nvidia's earnings surpasses estimates

  • Asian markets embrace risk-on mood

  • Gold rises as WTI Crude dips in volatile markets

  • BRICS Bloc eyes expansion with new members

Asian markets surged into "risk-on" mode today, bolstered by Nvidia's robust forecasts and softer Purchasing Managers' Index (PMI) readings from both Europe and the US. Tech stocks led the charge, driving notable gains across the region. The Hang Seng tech gauge, riding high on optimism, marked an impressive gain of approximately 3%, complemented by the benchmark index that ascended by 1.7%. This bullish sentiment resonated across China's stock market, where the CSI 300 index saw a solid increase of 1%.

In Japan, the Nikkei and Topix indices also capitalized on the positive momentum, trading higher as market participants absorbed the favorable outlook. Meanwhile, the Kospi experienced an upswing as the Bank of Korea adhered to expectations by maintaining unchanged interest rates. Adding fuel to the market's enthusiasm, the South Korean won rallied a substantial 1.5%, achieving its most substantial gain since March.

As investors digested these market dynamics, US 10-year Treasury futures dipped by 4 ticks, reflecting the shift in focus towards more risk-oriented assets. In the commodities realm, WTI crude oil encountered a modest dip, hovering around the $78.58 mark, while gold prices trended upward, reaching approximately $1,920.

Nvidia Soars, dispels supply concerns and outperforms earnings expectations

In a significant turn of events, Nvidia, a prominent player in the semiconductor sector, allayed one of the major concerns haunting investors—the potential lag in chip production relative to demand. CEO Jensen Huang reassured stakeholders, indicating that supply is poised to witness a substantial increase throughout the remainder of this year and the next. As a testament to this newfound confidence, Nvidia's shares surged by over 6% during extended trading hours.

The company's promising outlook extended to its financial performance as well. Nvidia boldly projected sales of approximately $16 billion for the three-month period concluding in October. Market analysts had, until recently, estimated a far more conservative figure of around $12.5 billion. This impressive earnings projection comes on the heels of Nvidia's extraordinary performance in the previous quarter, which notably outperformed earlier projections.

Further reinforcing its commitment to shareholder value, Nvidia greenlit an additional $25 billion for stock buybacks. However, amid the celebrations, the chipmaking giant did sound a cautious note. It warned that the implementation of stricter regulations pertaining to exports to China could have adverse implications for US companies over the long term.

Analysts at I/O Fund expressed their optimism by suggesting that Nvidia's shares could potentially rally by an additional 15%. The sales outlook's overperformance, surpassing analysts' projections by a significant $3.5 billion, undoubtedly underscores the company's resurgence and its potential to shape the semiconductor landscape in the near future.

BRICS Bloc set for expansion amid agreements

The BRICS bloc is primed for growth as its leaders have reached consensus on the terms governing the addition of new members. The specifics of this expansion are slated to be unveiled before the conclusion of the ongoing BRICS summit.

As the summit draws to a close today, anticipation is high regarding the announcement of these new membership terms. The development reflects the bloc's commitment to bolstering its influence and reach on the global stage.