Not long now, and we’ll be at the halfway point of the year. And while it may not feel much different, a lot would have changed. This week’s wrap is going to be a bit Americentric, but seeing as the ASX rises and falls on US-minded futures bets, it’s still relevant.
(And nothing meaningful really happened this week down under, either.)
In my view, the biggest thing that happened this week was the NVIDIA earnings report.
The AI-thematic multi-trillion-dollar market cap posted profits (“net income”) up over 600%, further confirming that we truly live in the era of Big Tech. Sales are at records, revenue is at records – AI isn’t going anywhere yet.
Investor interest in the stock, however, may be.
The last time NVIDIA dropped stunning earnings figures, it ushered in a global stock rally. The fact that NVIDIA is a Magnificent 7 stock is a big part of this, given that when it goes up, it can very easily lift the entire NASDAQ with it.
However, when NVIDIA reported its latest stellar earnings midweek US time, something funny happened. US markets closed red anyway.
So what changed?
There’s a lot of different observations you could make, and they’re all part of it.
‘Sell in May and go away’ is definitely a factor, as is good old profit-taking, and, a hotter than expected PMI read in the US also hurt macro sentiment looking at the overnight US Thursday session.
But it remains the truth only around three months ago, NVIDIA dropped earnings that SAXO described as “insane” (in a good way), and it made everyone go gangbusters. And then they did the same thing around 24 hours ago (I’m writing this on Friday afternoon Perth time.)
Except this time, you can’t help but feel that nobody really cares.
The ASX has had 2 red days in a row, and the US markets finished down overnight. It’s worth noting the S&P 500 has broadened since earlier in the year, and the other 493 companies outside the Mag7 are starting to prove their own merits.
But microchips, this time around, just haven’t been enough to make the market ignore everything else and focus only on an upward charge.
So has the 2024 equity rally just torn an ACL? We can only wait to find out. I’m inclined to think that we’ll probably see it continue, though, I also predicted the ASX would go green on Friday, so, there’s that.
This situation reminds me of the way world markets cared about the Japanese interest rates quite deeply through 2023 – Japan being the world’s third largest economy – but when the country started changing things up in 2024, well, nobody really cared anymore.
What had been widely accepted as a catalyst one moment suddenly didn’t matter anymore. Nothing changed. The Japanese economy didn’t become any less important. The oft-transient attention of the zeitgeist just swapped to something else that distracted it, and that was that.
Still, none of this is particularly unusual, per se. The market is fickle. Or it has terrible ADHD.
Here are the headlines that grabbed my attention this week:
Australian Equities
- Goldman Sachs warns ASX investors are too enthusiastic for loss-making companies
- Telstra hits 3Y low as market balks at 2,800-job-cut plans
- BHP still gunning after Anglo American after multiple failed attempts
International Equities
- Morgan Stanley says S&P500 will end year at 5,400 level
- China keeps interest rates on hold, boosting sentiment across Asian markets
- NVIDIA reports net income up 620% vs pcp in Q1 fiscal 2025 (US) report
Australian Economy
- Goldman Sachs stick by November rate cut call for RBA
- Aussie consumer confidence “deeply pessimistic”: Westpac
- Capital Economics waters down expectations of RBA rate hike
- Australia’s travel sector has returned to pre-COVID normality: ACCC
International Economies
- Goldman Sachs wins licence to operate in Saudi Arabia
- Reserve Bank of NZ startles markets by talking about rate hikes
- China’s latest stimulus measures for property sector inadequate, according to some analysts
- Think tank warns rising sea levels would cripple oil import infrastructure
Commodities
- Goldman Sachs sees further upside for copper prices in 2024
- As of Monday 20th, gold prices are up nearly 25% YOY
- Broad-based metals rally stalls on Friday as investors digest US PMI data; Chinese demand
Geopolitics
- Iran’s President dies in shock helicopter crash blamed on fog-covered mountains
- Saudi King reportedly taken into hospital for lung issues
- China steps up military drills around Taiwan, surrounding island nation