The FTSE 100 was swept higher on Thursday by a wave of optimism after US chipmaker NVIDIA smashed earnings estimates.
The FTSE 100 was 0.25% higher at the time of writing.
NVIDIA’s earnings almost had a binary outcome for risk assets; miss expectations and risk a sell-off in global equities, beat estimates and send stocks higher, as we have seen today.
“Better than expected quarterly earnings from Nvidia have significant implications for global markets,” said AJ Bell investment director Russ Mould.
“The chip specialist has been one of ‘The Magnificent Seven’ stocks driving US markets this year, with its shares up 243% since the start of 2023. It’s been one of the market superstars and given investors hope that it is still possible to make good money from equities in an environment where interest rates continue to go up and inflation remains sticky in places.
“Any disappointment in its latest results would have gone down like a lead balloon. It could have hurt investor sentiment and caused contagion elsewhere in the markets. Fortunately, it’s pulled another rabbit out of the hat and given investors everything they wanted and more.
“This appears to have sprinkled some magic dust on the markets and provided new impetus to share prices. The rest of the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft and Tesla) all saw their shares rise in after-hours trading following Nvidia’s results, and on European markets we’ve seen tech-related stocks such as ASML and Scottish Mortgage move higher.”
The UK Investor Magazine included the Scottish Mortgage Investment Trust in ‘Three Investment Trusts primed to explode higher’ published in July due to the trust’s propensity to rally in a general risk-on move.
The Jackson Hole central bank event will be closely watched going into the weekend for any indication of a change in the trajectory of interest rates.
The subtleties of central banker’s language can have a profound impact on global equities and the ongoing event in the US could set the tone for trade in the near term.