Investors’ bet on artificial intelligence, which has driven the American markets since the beginning of the year, has found its perfect confirmation symbol in Nvidia. We talk a lot about it this morning, just to escape a certain gloom elsewhere on the financial markets, which slump under the weight of not really exciting news.
After a long series of sessions without much relief, but generally positive, the equity markets have entered a more complicated phase. The last two sessions have been marked by fairly pronounced declines. They were even quite brutal for certain places, like Paris, betrayed by its values of luxury. Recent developments give the impression that the burden of poor news has become a bit heavy to bear and that it will have to be lightened in order to move forward again. The left side of the balance contains the tough negotiations on the American debt ceiling, the fears of recession in the United States and Europe, the disappointment on Chinese growth and the inflationary threat which persists. As for the right-hand side, it is much less filled since it essentially contains a relative resistance of the results of the companies and especially the hope to see the American central bank returning to a rate policy more favorable to the economy.
The Fed, precisely, which published yesterday evening the report of the debates of its last meeting of May 3 on the rates. A meeting which ended with an increase of 25 basis points, but which had above all left investors with the feeling that the central bank was going to take a break during the June 14 meeting. Sentiment confirmed by the minutes, since the probability of a status quo remained roughly unchanged at 70%, according to CME’s FedWatch prediction tool. As for the blow after, it remains uncertain. Some central bankers believe further tightening will be needed later in the year to bring inflation under control, while others believe the effort is likely sufficient given signs of an economic slowdown already visible. All in all, we’re not much further ahead… In any case, things have to be taken in order: the short-term concern is the debt ceiling.
Amidst these major macroeconomic blocs that shape market trends, there are also seemingly secondary events that are capable of changing the game, at least momentarily. This may be the case with the results published by Nvidia last night. I was just talking about it the day before, the American group has entered the fairly narrow circle of trend setters, in the same way as some illustrious well-known technological files. He released stunning forecasts, significantly higher than analysts were expecting. This happens quite rarely in the sector, especially with the Santa Clara company, which publishes late because of its staggered fiscal year (the fiscal year ends on January 31), which generally gives the market time to adjust its expectations with the indications provided by the competition. So there, it’s mind-blowing and there is an explanation behind all that: artificial intelligence of course. Moreover, to give you an idea, I took the transcription of the presentation of the results of Nvidia last night to make a statistic: the term “AI” is present 209 times. I was asked yesterday why the company is at the heart of the rise of the sector when it is a specialist in graphics cards. The answer is simple: graphics processors have extraordinary computing capabilities. As a result, Nvidia has been invited to all the feasts for years. At the feast of video games and digitization, his first job. Then to the feast of cryptocurrency mining, which allowed the second phase of Nvidia’s bullish explosion. Then to the feast of accelerated computing, which boosts the performance of data centers. Finally, to the generative AI feast that is looming. In other words, Nvidia is still in the right place at the right time.
All that to say that the quality of Nvidia’s figures has awakened the technology compartment since the close of Wall Street last night. The title itself made a staggering +25% off session. And we’re not talking about a small cap. When we know that the action already weighs $755 billion on the stock market, this means that it could rise to $940 billion if the rise holds. Or more or less LVMH, L’Oréal, TotalEnergies and Sanofi combined. This confirms that artificial intelligence, at the origin of a large part of the progression of the S&P500 and the Nasdaq in 2023, is a deposit of significant value. At least for Nvidia at this point.
In other news, the rating agency Fitch has placed the “AAA” rating of the United States under review for a possible downward revision, because of tensions on the debt ceiling. Investors are still waiting for progress on this front. They will also follow a new estimate of US Q1 GDP at 2:30 p.m., as well as old real estate figures, at a time when the mortgage market is weakened by rate hikes.
On the Asia Pacific markets, the Nikkei 225 is recovering somewhat in Japan, even if the Topix is still moving into the red. The yen’s slide supports the market, as it traditionally does. China, on the other hand, is depressed against a backdrop of fears for economic dynamism, with in particular a Hang Seng at the bottom of the bucket: -2.5% in session. South Korea lost 0.3%, despite the positive performance of the semiconductor compartment in the wake of Nvidia. Australia closed down 1%. European leading indicators are close to balance with a fairly thin bullish bias. Nvidia’s contribution gives a nice, somewhat artificial green color to the S&P and Nasdaq futures, while the Dow Jones retreats. The CAC40 gleans 0.04% to 7256 points.
Economic highlights of the day
We will therefore be entitled to two new GDP readings for Q1 2023, for Germany (8:00 a.m.) and the United States (2:30 p.m.). Across the Atlantic, investors will also take note of the traditional weekly employment figures (2:30 p.m.) and sales of housing in the old (4:00 p.m.). The whole agenda here.
The euro retreats to 1.0737 USD. The ounce of gold is trading at 1957 USD. Oil is firm, with North Sea Brent at $78.17 a barrel and US WTI light crude at $74.17. The performance of the american debt over 10 years increases by 3.75%. Bitcoin is trading for 26,700 USD.
The main changes in recommendations
- Aixtron: Morgan Stanley resumes online weighted tracking targeting EUR 31.
- bioMérieux: AlphaValue remains to be accumulated with a target price raised from 110 to 114 EUR.
- CaixaBank: Jefferies goes from holding to buying, targeting EUR 4.60.
- Embrace: ABG changed from buy to hold aiming for 27 SEK.
- Eurocommercial Properties: Berenberg remains to be kept with a price target raised from 22 to 24 EUR.
- Individual: Jefferies remains long with a price target raised from 2115 to 2330 GBp.
- JCDecaux: JP Morgan remains underweight with a reduced target price of 15.90 to 15.40 EUR.
- Julius Bär: Barclays remains overweight with a price target reduced from 80 to 76 CHF.
- MFE-MediaForEurope: JP Morgan goes from underweight to neutral, targeting EUR 0.64.
- Renault: Mediobanca is starting to track purchases by targeting EUR 49.
- Sartorius Stedim Biotech: AlphaValue remains long with a price target reduced from 408 to 374 EUR.
- Soitec: Morgan Stanley resumes monitoring to overweight, targeting EUR 173.
- Standard Chartered: Jefferies remains long with a price target raised from 980 to 1010 GBp.
- VAT: UBS remains long with a price target raised from 305 to 375 CHF.
- Vicat: Berenberg remains to be kept with a target price raised from 23 to 29 EUR.
Important (and less important) announcements
- Casino is heading towards the opening of official negotiations with its creditors in order to resolve its financial difficulties, two sources familiar with the matter said on Wednesday.
- Pierre Palmieri (Societe Generale) elected Chairman of the Board of Directors of ALD.
- Dassault Aviation cancels 0.7% of its own capital.
- Orpea’s accelerated safeguard procedure extended until 07/24. The report of the firm mandated to decide on the financial restructuring considers it fair for the shareholders.
- Waga Energy is starting its first renewable natural gas production unit in Canada.
- Voyageurs du Monde announces the full resumption of activity after the cyberattack.
- The potential buyer of Egide’s American activities withdraws.
- OSE Immunotherapeutics announces the end of recruitment for the phase II trial with Tedopi.
- PCAS will sell its Canadian subsidiary to DIC.
- Wallix is launching a cybersecurity offer.
- Hunyvers strengthens its position in boating with the acquisition of Marine Plaisance Service.
- Transgene and BioInvent announce positive results for the phase Ia trial of the oncolytic virus BT-001 in the treatment of solid tumors.
- The small corner of dilution: Delta Drone gratifies us with a bold new financial package marked by the arrival of a new investor. Spineway signs OCA with Negma. Atari wants to issue 30 M€ of OC. Boostheat signs a letter of intent for a project on a software solution. Pharnext publishes data from a long-term open-label follow-up study with PXT3003.
- They have published / They must publish : Derichebourg, Coface, Aramis, Figeac Aero, Netgem, Pierre & Vacances…
In the world
Company results (comments are given on the spot and do not prejudge the evolution of securities)
- Nvidia: the title explodes up nearly 25% after the publication of unexpected quarterly forecasts.
- Snowflake: the title fell by 13% outside the session after disappointing results.
Important (and less important) announcements
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