Nvidia Spurs Stock Rally; Japan, Europe at Records: Markets Wrap

(Bloomberg) — Global stocks rallied, with Japan’s benchmark hitting a record high and Europe’s on track to do the same, after Nvidia’s blowout sales forecast reinforced investor conviction in the boom in generative AI use.

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The Nasdaq 100 index jumped 2% and the the S&P 500 was up more than a percent, suggesting the rally will carry over to Wall Street. Nvidia soared as much as 11% in after-hours trading after it said first-quarter revenue would likely hit $24 billion, above prior estimates of around $22 billion.

Japan’s Nikkei 225 Index closed above a peak last achieved in 1989, driven by gains in technology shares and chip-gear producers. The Stoxx Europe 600 index surpassed its January 2022 closing high, with the tech sector surging more than 3% and the region’s biggest chipmaker, ASML Holding NV, climbing as much as 5%. A gauge of Asian shares rose to its highest level in almost two years.

“As goes Nvidia, so goes the market,” said Kim Forrest, chief investment officer of Bokeh Capital Partners LLC. “It does confirm the narrative that AI is going to continue to be strong for the foreseeable future. This narrative supported the markets last year, why wouldn’t it do the same this year?”

The hype around Nvidia’s earnings overshadowed a hawkish tone to the minutes of the Federal Reserve’s last policy meeting, where most officials expressed concern about the risk of cutting interest rates too soon. Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari are set to speak today, providing investors with more food for thought along with jobs and home sales data.

Treasuries were steady after a selloff that pushed the 10-year yield five basis points higher on Wednesday. A gauge of the dollar declined for a fourth day.

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Positive manufacturing data from Europe’s second-biggest economy, France, supported stock gains. Bonds across the euro region fell as traders trimmed bets on rate cuts by the European Central Bank. Germany’s 10-year yield rose about five basis points.

Meanwhile, earnings season remains in full swing. Mercedes-Benz Group AG jumped after the German carmaker’s gloomy earnings forecast was offset by its plan for an accelerated $3.2 billion buyback. Rolls Royce Holdings Plc surged after reporting higher-than-expected profit. Nestle SA slumped after forecasting a slowdown in revenue growth.

Delivery Hero SE sank after the food delivery firm said talks to sell its Foodpanda business in some Southeast Asia markets have failed. Lloyds Banking Group Plc fell after setting aside £450 million ($570 million) to pay for possible compensation and other costs linked to a UK review of car finance.

West Texas Intermediate crude added to a 1.1% gain on Wednesday and climbed above $78 per barrel mark, supported by tightening physical supplies. Gold climbed above $2,029 per ounce. Bitcoin steadied after a drop Wednesday.

Key Events This Week:

• Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday

• US initial jobless claims, US existing home sales, Thursday

• ECB issues account of January meeting, Thursday

• Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak, Thursday

• China property prices, Friday

• Germany IFO business climate, GDP, Friday

• ECB publishes 1- and 3-Year inflation expectations survey, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.7% as of 8:36 a.m. London time

• S&P 500 futures rose 1.2%

• Nasdaq 100 futures rose 2%

• Futures on the Dow Jones Industrial Average rose 0.5%

• The MSCI Asia Pacific Index rose 1.1%

• The MSCI Emerging Markets Index rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%

• The euro rose 0.5% to $1.0870

• The Japanese yen was little changed at 150.17 per dollar

• The offshore yuan was little changed at 7.1939 per dollar

• The British pound rose 0.5% to $1.2701

Cryptocurrencies

• Bitcoin rose 0.6% to $51,716.98

• Ether rose 2.5% to $3,001.45

Bonds

• The yield on 10-year Treasuries was little changed at 4.31%

• Germany’s 10-year yield advanced three basis points to 2.48%

• Britain’s 10-year yield advanced three basis points to 4.13%

Commodities

• Brent crude rose 0.5% to $83.46 a barrel

• Spot gold rose 0.3% to $2,032.66 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu and Richard Henderson.

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