Market report: Nvidia’s balance sheet is likely to push the DAX into positive territory

market report

As of: May 23, 2024 7:52 a.m

Strong figures from US chip manufacturer Nvidia are likely to lure investors back into the stock market today. However, the Fed minutes dampen hopes of an early US interest rate turnaround.

The broker IG estimates the DAX 0.2 percent higher to 18,723 points before the start of trading. Last week’s record high of a good 18,892 points remains close and thus also the round mark of 19,000 points. Yesterday, the leading German index closed 0.2 percent weaker at 18,680 points.

The balance sheet of the US chip manufacturer Nvidia should ensure a good mood on the stock market today. The company significantly exceeded the expectations of financial market players and also raised its forecast for the current year. Nvidia is considered one of the main beneficiaries of the current AI euphoria.

Yesterday’s publication of the minutes of the last central bank meeting of the US Federal Reserve (Fed) could have a more dampening effect. Despite the recently stubbornly high inflation, the Fed continues to expect price increases to ease.

The participants therefore assume that the inflation target of two percent will be achieved in the medium term. However, they admitted that the wave of inflation will probably take longer to subside than initially assumed. After the minutes were published, traders continued to assume that the first interest rate cut would take place in September.

According to ECB Director Isabel Schnabel, the European Central Bank (ECB) is heading for a first interest rate cut in June, unless there are any surprises before then. “If the inflation forecasts and the new data confirm our previous view, then an interest rate cut in June is likely,” Schnabel said on Wednesday evening in the television program “mex. das marktmagazin” on Hessischer Rundfunk (hr).

“We are now seeing a slight recovery in the economy in the euro area, but at the same time inflation is still falling.” In this respect, one can have some hope that the ECB will succeed in returning to price stability without causing a recession.

The US stock markets also fell on Wednesday after the publication of the Fed minutes. The Dow Jones closed down 0.5 percent at 39,671 points. The technology-heavy Nasdaq fell 0.2 percent to 16,801 points and the broad-based S&P 500 fell 0.3 percent to 5,307 points.

US chip maker Nvidia’s better-than-expected profits have already given a boost to technology stocks in Japan. The Nikkei gained 0.8 percent to 38,913.48 points, the broader Topix was 0.4 percent higher at 2,747.49 points.

Geopolitical tensions, however, kept investors in China on tenterhooks. Just a few days after the new Taiwanese President Lai Ching-te took office, the People’s Republic began two days of military exercises around the island claimed by the government in Beijing. The Shanghai stock exchange lost 0.9 percent to 3129.89 points. The index of major companies in Shanghai and Shenzhen fell 0.8 percent to 3,653.50 points. The Taiwanese stock market, on the other hand, was unimpressed and recently increased by 0.3 percent.

Business is going better than expected at chip manufacturer Nvidia. The specialist in semiconductors for applications in the field of artificial intelligence (AI) announced that it expects sales of 28 billion dollars (plus/minus two percent) in the current quarter, almost 1.4 billion more than analysts expected on average.

According to the information, the US group had already earned significantly more than expected at $26.04 billion in the past quarter. That was an increase of 262 percent compared to the same period last year. Net profit rose by around 600 percent to almost $14.9 billion. The group also announced that it was planning a stock split at a ratio of 1:10.

The US company Dupont de Nemours wants to split into three publicly traded companies. The electronics business and the water division will be separated through a tax-free transaction, the company announced. The remaining areas will therefore focus on things like biopharma and medical devices.

In addition, CEO Ed Breen will leave his post on June 1st, but will remain Chairman of the Board of Directors. His role as CEO will be taken over by Lori Koch, who previously headed the finance department.

The US pharmaceutical company Pfizer wants to save around 1.5 billion US dollars by the end of 2027. The company announced that the first effects should be realized from next year. The board hopes that the restructuring will increase efficiency, while the network structure will be changed and the product portfolio will be revised. The managers are calculating around 1.7 billion euros as one-off costs for the tough austerity measures, which primarily include severance and implementation costs, it was said.

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