Nasdaq futures jump 1% as Nvidia stokes tech rally: Markets wrap

Nasdaq futures rallied as a strong outlook from Nvidia gave fresh impetus to the artificial intelligence hype that’s boosting tech stocks this year.

Nvidia advanced 7.9% in premarket trading after the chipmaker delivered a third straight sales forecast that beat analysts’ estimates, while tech giants such as Apple Inc. and Microsoft also rose. Contracts on the tech-heavy Nasdaq 100 rose 1.2%, while those on the S&P 500 also signaled further gains for stocks.

Semiconductor firms gained in Europe, while tech also outperformed in Asia.

“Nvidia has shown that the demand for AI technology remains strong despite what is going on elsewhere,” said Stuart Cole, chief macro economist at Equiti Capital in London. “The potential remains for equity markets to soften again. But I can easily see AI-related stocks, like Nvidia, and tech shares probably more generally, being seen as a safe haven in the equity world.”

Nvidia’s results, along with the AI stock frenzy, are punctuating a week that’s seen broad equity-market gains and renewed risk taking by investors. While worries about rising bond yields dominated the conversation last week, the tone has quickly shifted back to mega-cap tech and whether their earnings can power a stock market that’s been treading water for the past month.

Europe’s Stoxx 600 is on track for a four-day winning streak and the MSCI Emerging Markets Index jumped 1.5%, the biggest gain in a month. Investors were also taking bullish cues from news that leaders from Brazil, Russia, India, China and South Africa agreed to expand their Brics group to give it more economic clout.

Investors are also looking ahead to the gathering of top central bankers at Jackson Hole. Treasuries edged lower and German bunds were little changed, after Wednesday’s broad rally in bonds spurred by weak economic data. Gilts rose, led by the 10-year, and money markets pared wagers on further Bank of England tightening for a third day.

Nvidia said sales will be about $16 billion in the three months ending in October, blowing past analysts’ estimate of $12.5 billion. The outlook underscores Nvidia’s role as the key beneficiary of the AI computing boom. Faced with skyrocketing demand for chatbots and other tools, data center operators are stocking up on the company’s processors, which are adept at handling the heavy workloads AI requires.

“The results are very strong and indicate robust demand for AI processors and infrastructure,” said Janet Mui, head of market analysis at RBC Brewin Dolphin. “I can see a market rally continuing in the near-term as this AI theme is less impacted by the cyclical aspects of the economy.”

Pockets of concern remain for global investors. China’s $2.9 trillion trust industry is showing signs of strain, adding further pressure on the economy, while insiders are also worried that efforts to improve the health of local government financing vehicles may not play out as hoped.

The People’s Bank of China provided further support for the yuan, setting the daily reference rating stronger than estimates.

In commodities, European natural gas prices tumbled on signs that a labor dispute at Australia’s biggest liquefied natural gas export plant will be resolved, easing fears about one of three possible strikes in the key exporting nation.

Key events this week:

• US initial jobless claims, durable goods, Thursday
• Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
• Japan Tokyo CPI, Friday
• US University of Michigan consumer sentiment, Friday
• Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.6% as of 6:41 a.m. New York time
• Nasdaq 100 futures rose 1.2%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 rose 0.2%
• The MSCI World index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.0853
• The British pound fell 0.3% to $1.2683
• The Japanese yen fell 0.4% to 145.44 per dollar

Cryptocurrencies

• Bitcoin fell 0.5% to $26 450.21
• Ether fell 0.9% to $1 668.78

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.20%
• Germany’s 10-year yield was little changed at 2.52%
• Britain’s 10-year yield declined three basis points to 4.44%

Commodities

• West Texas Intermediate crude rose 0.4% to $79.24 a barrel
• Gold futures were little changed