Before the Bell: Nasdaq futures rally on Nvidia results; Canada's bank earnings kick off - The Globe and Mail

Equities

S&P and Nasdaq futures were up early Thursday with tech shares getting a boost after chipmaker Nvidia blew past market expectations with its latest revenue forecast. Major European markets turned mixed after a positive start. TSX futures steady with earnings from Canada’s biggest banks in focus.

In the early premarket period, S&P and Nasdaq futures were all positive with Nasdaq futures posting a gain of more than 1 per cent ahead of the North American open. Dow futures lagged, dipping into the red. All three are coming off a winning day on Wednesday which saw the S&P 500 and Nasdaq both finish more than 1-per-cent higher. Canada’s S&P/TSX Composite Index closed up 0.96 per cent yesterday.

Sentiment got a lift after Nvidia’s quarterly revenue forecast beat Wall Street expectations by billions of dollars. The company, which released its latest results after Thursday’s close, also announced it would buy back US$25-billion in stock. Markets had been anticipating the results, looking for a reading on the health of the chip sector amid the AI boom. Nvidia were up more than 8 per cent in early premarket trading on Thursday morning.

“The market expectations were sky-high, the results went to the moon, the forecasts for this quarter are as stunning, and the company is expected to earn around $30-billion in full-year 2024 because Nvidia is not and will not be concerned about the industry-wide slump in chips demand, thanks to a decent surge in demand for AI processors in data centers,” Swissquote senior analyst Ipek Ozkardeskaya said in a note. “Magic is happening for Nvidia.”

In this country, Royal Bank and Toronto-Dominion Bank both released results ahead of the opening bell. The rest of Canada’s big banks follow next week. Most analysts anticipate that earnings from the country’s big banks will drop between 4 per cent and 7 per cent year-over-year, dragged down by narrower profit margins, higher reserves for loans that could turn sour, and expenses outpacing revenue.

The Globe’s Stefanie Marotta reports this morning that RBC earned $3.9-billion, or $2.73 per share, in the three months that ended July. 31. That compared with $3.58-billion, or $2.51 per share, in the same quarter last year. Adjusted to exclude certain items, the bank said it earned $2.84 per share. That beat the $2.70 per share analysts expected, according to Refinitiv.

TD, meanwhile, earned $2.96-billion, or $1.57 per share, in the three months that ended July. 31. That compared with $3.21-billion, or $1.75 per share, in the same quarter last year. Adjusted to exclude certain items, including costs related to TD’s terminated deal to takeover First Horizon Corp., the bank said it earned $1.99 per share. That fell below the $2.04 per share analysts expected, according to Refinitiv.

The remainder of the county’s major lenders are scheduled to report next week.

Overseas, the pan-European STOXX 600 was flat by midday. Britain’s FTSE 100 added 0.19 per cent. Germany’s DAX and France’s CAC 40 slid 0.07 per cent and 0.01 per cent, respectively.

In Asia, Japan’s Nikkei ended up 0.87 per cent. Hong Kong’s Hang Seng gained 2.05 per cent.

Commodities

Crude prices were steady with weak readings on global business activity tempering sentiment ahead of Fed chair Jerome Powell’s speech at the Jackson Hole symposium on Friday.

The day range on Brent was US$82.57 to US$83.41 in the early premarket period. The range on West Texas Intermediate was US$78.22 to US$79.07.

Data from purchasing managers’ index (PMI) surveys released this week showed contraction in business activity in the euro zone and Japan while activity in the United States was near stagnation in August. The surveys raised concerns about global demand amid uncertainty about economic growth.

Meanwhile, traders are also awaiting Mr. Powell’s comments at the highly anticipated conference in Jackson Hole, Wyoming, which begins today. Mr. Powell is scheduled to speak on Friday morning.

“The imminent commencement of the Jackson Hole Economic Symposium, set to begin later today, is poised to assume a role of paramount significance in steering global markets,” Stephen Innes, managing partner with SPI Asset Management, said.

“And while central bank policymakers will be knowingly sensitive to keep things sailing on an even keel. If anything, the risk is that the Fed says too much and the market listens too anxiously.”

Sentiment drew some support from the latest weekly crude inventory numbers from the U.S. Energy Information Administration, which showed U.S. crude stocks fell by 6.1 million barrels in the week to Aug. 18 to 433.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.8 million-barrel drop.

In other commodities, gold prices hit their best level in two weeks.

Spot gold was up 0.3 per cent at US$1,920 per ounce by early Thursday morning, hitting its highest level since Aug. 10. U.S. gold futures were flat at US$1,948.90.

Currencies

The Canadian dollar was down slightly in early trading while its U.S. counterpart bounced higher as markets look to the Fed chair’s remarks on Friday for clarity on the future direction of interest rates.

The day range on the loonie was 73.84 US cents to 74.03 US cents in the early premarket period.

On world markets, the U.S. dollar index, which measures the greenback against a basket of six major currencies, rose 0.15 per cent to 103.50, bouncing from Wednesday’s drop, but was still set for a monthly rise, according to figures from Reuters.

“As the Jackson Hole Symposium gets under way, market participants are looking for direction,” said Isabel Albarran, Investment Officer at Close Brothers Asset Management.

“Talk of stronger-than-expected data could point to ongoing inflation concerns, while a focus on the cooling labour market, weak PMIs and downward trending CPI may point to rates being close to the peak,” she added.

The euro, meanwhile, was down 0.04 per cent at US$1.0860 early Thursday morning. Britain’s pound was off 0.29 per cent at US$1.2687.

In bonds, the yield on the US10-year note was lower at 4.192 per cent in the predawn period, after hitting a 16-year high earlier this week.

More company news

Boeing shares fell 2% before the bell on Thursday after the U.S. plane maker warned of delays in near-term deliveries of 737 MAX jets due to a fresh quality issue involving its biggest supplier Spirit AeroSystems. This could put pressure on the top end of Boeing’s annual 737 delivery target of 450 planes, some Wall Street analysts warned even as the plane maker said it was evaluating that goal. It is for the second year that Boeing’s delivery targets are under review, after supply-chain issues forced it to temper its goal last year. The latest quality issue is due to improperly shaped holes in the aft pressure bulkhead of some planes. -Reuters

Economic news

(8:30 a.m. ET) U.S. initial jobless claims for week of August 19.

(8:30 a.m. ET) U.S. durable goods orders for July.

(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for July.

(11 a.m. ET) U.S. Kansas City Fed Manufacturing Activity for August.

With Reuters and The Canadian Press

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2023-08-24 09:37:38Z
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