NVIDIA announced earnings data which exceeded expectations and led the wider stock market higher to recover part of its recent losses.
- The largest company in the world, the tech company NVIDIA, reported earnings data yesterday which exceeded consensus expectations at an increase of 20% over the previous quarter. This led the AI sector, the tech sector in general, and the wider stock market higher, with both the major US indices the S&P 500 Index and the NASDAQ 100 Index gaining firmly. Today saw the biggest stock gains in Asia in the last six weeks, with the KOSPI Composite gaining by over 8%. We see generally a more bullish, risk on envinroment. I am long of the two major US indices and most trend traders will be too.
- Yesterday saw UK inflation data fall by more than expected, from an annualised rate of 3.3% to 2.8%, lower than the consensus forecast of 3.0%. This did not seem to affect the relative value of the British Pound, though.
- The weekend approaches, and with it, President Trump's implied but clear deadline to Iran to agree a deal. Markets are now seeing a stronger chance of an imminent deal to end the war, which is another factor which helped boost stock markets and risk assets yesterday, after Trump started talking up the prospect, and leaks from Pakistan and the Gulf nations suggested that a deal is close. I find it very hard to believe Iran will agree to Trump's bottom line, so either it is not going to happen, or President Trump is now prepared to accept less.
- Bank of Japan Board Member Koeda says Japan's inflation rate is already effectively at 2%, implying that the time to hike rates further has come. This does not seem to have had much effect upon the Japanese Yen though.
- Following more optimism in the market over a USA / Iran deal, the price of WTI Crude Oil has fallen by more than 5%. Crude Oil and its derivatives will be sensitive to rumours and the progress of the ongoing negotiations.
- Generally high yields remain a big factor in market sentiment, weighing upon equities, as central banks react to sticky and growing levels of inflation. The 10-Year US Treasury Yield made a new multi-year high yesterday. Trend traders will certainly want to be long of the US 2-Year and 10-Year Treasury Yield futures, which are available as very affordable micro futures on the CME. Rate yield instruments have a great historical record for trend followers over recent decades. I am long here.
- The USD/INR currency pair has fallen from its high with quite a strong move, driven lower by the decline in Crude Oil prices.
- In the wider Forex market, the US Dollar remains firm. The USD/JPY currency pair is still in focus as it trades above ¥159 yesterday.
- Gold remains close to its 1.5-month low price and is looking somewhat bearish over the short term.
- Bitcoin seems to have found support above $75,000 as it starts to make a weak but more decisive bullish turn.
- The Australian Unemployment Rate rose unexpectedly, from 4.3% to 4.5%.