Markets fall after Nvidia report, European inflation in focus, company news

Market reviews

• Markets are falling in Asia and Europe this morning as AI darling Nvidia defied expectations from investors who were unhappy with its profits, revenue and prospects, beating Wall Street. Nvidia shares have surged more than 150% this year on insatiable demand for generative AI, so a 7% after-hours drop in its shares could prove another reason to buy shares of the world's second-most valuable company.

• Shares of Taiwan-listed chipmaker TSMC fell 2%, Nasdaq futures fell 0.7% and Europe was set for a lower open, with EUROSTOXX 50 futures down 0.2%.

• Germany and Spain will publish their preliminary inflation data for August later in the day, and several European Central Bank officials will take part in some of the panel discussions. Headline inflation is expected to slow to 2.3% in Germany and 2.5% in Spain. Any downside surprises there will be factored into Friday’s eurozone inflation figures and raise the prospects of a sustained ECB easing before the end of the year. Swaps imply a rate cut in September is a done deal, but they are less certain about the likelihood of such a move in October and December, pricing in just 60 basis points of easing by year-end.

• The often volatile U.S. jobless claims report, due later in the day, also gained prominence after Federal Reserve Chairman Jerome Powell said policymakers did not want the labor market to deteriorate further.

• U.S. Treasury yields were quiet, although the inverted curve between the 2- and 10-year yields was on the verge of turning positive for the first time since July 2022, excluding a brief reversal during the Japanese market crash earlier this month. The 2-year yield was 3.8671%, just 3 basis points above the 10-year yield.

• Stocks slid ahead of NVDA's report, led by semiconductors. And after the report, selling continued. Keep a close eye on the market today. Perhaps the weak reaction to NVDA's strong report is the first sign of market fatigue. The company's business cannot grow like a rocket forever, as the high base effect appears.

• Saudi Arabia's oil export revenues fell to their lowest in three years due to lower prices and the kingdom's decision to cut output. Revenue from crude and refined products fell to $17.7 billion in June, down 9 percent from a year earlier and about 12 percent from May, according to the country's main statistics agency.

• Samsung SDI and General Motors have struck a $3.5 billion deal to build a joint battery plant. Samsung SDI shares rose 3.2% after the deal was announced.

• Disney and Reliance receive approval for $8.5 billion merger. Reliance and Disney had to make concessions to get antitrust approval.

• Bezos-led funding round values ​​Swiss robot maker Swiss-Mile at $100 million

• TikTok must answer to court over death of 10-year-old girl, US court rules A US appeals court has revived a lawsuit against TikTok filed by the mother of a 10-year-old girl who died after taking part in a viral “blackout challenge” that challenged social media users to choke themselves until they passed out.

• Abercrombie (ANF) sales beat analysts' expectations, with shares falling 17%. The company beat sales for the sixth straight quarter and gave strong guidance, but it wasn't enough to impress investors.

• The U.S. Securities and Exchange Commission (SEC) is set to require monthly reports on mutual funds' holdings. Wall Street's top regulator is set to approve new rule changes Wednesday that require mutual funds and exchange-traded funds to report their portfolio holdings on a monthly basis.

• Goldman analysis sheds light on rising role of commodities in ESG The days of equating ESG with a commodity blacklist appear to be over. In a new study, Goldman Sachs analysts found that fund managers are increasingly including oil, gas and mining stocks in portfolios that are ESG-registered.

• Alphabet to launch human image generation on Gemini after pause. Alphabet said Wednesday it has updated Gemini's AI image generation model and will launch human visual image generation in the coming days, after a months-long pause.

• Elon Musk's xAI operates gas turbines without permit at data center - Reuters. The Southern Environmental Law Center sent a letter to the Environmental Protection Agency and the Shelby County Health Department, where the data center is located. "Despite installing nearly 20 gas turbines with a combined capacity of about 100 megawatts - enough electricity to power about 50,000 homes - xAI apparently has not applied for any permits for the emissions.

• SEC threatens to sue NFT marketplace - OpenSea CEO "OpenSea has received a message from the SEC threatening to sue us because they believe NFTs on our platform are securities," OpenSea co-founder and CEO Devin Finzer said.

• Total unit fined $48 million for market manipulation attempt. The trading unit of French oil company TotalEnergies SE has been fined $48 million by the U.S. Commodity Futures Trading Commission over allegations it attempted to manipulate gasoline markets.

• "Now may be the time" to cut rates, says Atlanta Fed's Bostic.

• Shares in the morning after the report
NVDA -7% (worst reaction to the report in 2.5 years)
CRWD -3%
CRM +4%

Key events likely to impact markets on Thursday:
- Preliminary CPI data for August in Spain and Germany.
- Weekly jobless claims in the US.
- ECB Chief Economist Philip R. Lane to participate in a panel discussion.
- ECB Deputy Governors Aino Bunge and Olli Rehn to participate in panel discussions.
- Final US GDP data for the second quarter.

International Reviews

• UBS cut its China growth forecast due to a deeper housing slump, from 4.6% to 4.0% in 2025.

• Pavel Durov was released under judicial supervision and bail of 5 million euros. He was charged and prohibited from leaving France.

• China and the United States will schedule a Biden-Xi call in the coming weeks, the White House says. The conversation will be formal because U.S. foreign policy will soon be determined by the next president.

• Indonesia's Energy Ministry (ESDM) plans to retire 13 coal-fired power plants by 2030
as part of the country's efforts to reduce emissions in line with its net-zero emissions goals.

• Trump indictment redacted. U.S. Special Counsel Jack Smith has filed an updated indictment against former President Donald Trump in the case of attempted fraud in the 2020 presidential election. Smith was forced to redact it after the U.S. Supreme Court ruled that Trump has partial immunity from prosecution.

• In Germany, two parties are playing the “Russian card” ahead of the elections. The war in Ukraine is one of the central themes of the election campaign for the upcoming state elections in Germany. Two populist parties – the right-wing “Alternative for Germany” and the “Sara Wagenknecht Union,” which positions itself as a left-wing party – could achieve success thanks to the theme of refusing military aid to Kyiv.

• Poland to boost defence spending in 2025 to record high. Polish Prime Minister Donald Tusk said the 2025 state budget would include record-high defence spending. Tusk on Wednesday outlined the main points of next year's budget, which he called "generous" and supportive of continued economic growth.

• The powerful typhoon Shan-Shan is approaching the Japanese islands. An evacuation order has been issued for 845 thousand people in Kyushu, and factories are shutting down: Toyota, for example, has stopped all its production lines.