Nasdaq futures rallied and chipmakers soared as a bullish sales forecast from Nvidia Corp. ignited gains in companies linked to the frenzy for artificial intelligence.
(Bloomberg) — Nasdaq futures rallied and chipmakers soared as a bullish sales forecast from Nvidia Corp. ignited gains in companies linked to the frenzy for artificial intelligence.
Nvidia shares soared 27% in US premarket trading after its forecast for surging revenue surprised even the most optimistic analysts on Wall Street, propelling the company to the cusp of a $1 trillion market value. Contracts on the Nasdaq 100 added 1.8% and ASM International NV led gains in the Stoxx 600 Index.
It’s another sign that investors are willing to pile into promising tech stocks, despite the growing worries about China’s economy and a potentially catastrophic US debt default. Fitch Ratings warned that the US’s AAA rating is under threat, though it still expect politicians will reach an agreement before time runs out.
Treasury-bill yields slated to mature early next month surged above 7% on Wednesday, with the rate on the June 1 and June 6 maturities increasing by more than a percentage point. Those securities are seen as most at risk of non-payment if the government exhausts its borrowing capacity.
Read more: Nvidia Forecast Shows How AI Frenzy Is Transforming Chip Sector
“Nvidia was last night’s good surprise,” said Gilles Guibout, head of European equity strategies at Axa Investment Managers. “But more broadly, there are few reasons for the market to keep rising: interest rates are not going down, global economic growth isn’t rebounding, full-year earnings are seen flat and stock valuations are already at a decent level.”
If the premarket gain holds, Nvidia’s value would rise by about $180 billion, ranking among the biggest one-day pops in history. The company, whose shares have doubled this year, is at the forefront of an explosion in spending on artificial intelligence computing following the success of ChatGPT and other tools.
“If you look at tech it continues to reinvent itself over and over,” Larry Adam, chief investment officer at Raymond James, said in an interview on Bloomberg Television. “I continue to like the big tech names.”
In Chinese markets, sentiment is continuing to worsen. The Hang Seng Index shed 1.9% on the day and the yuan broke through the closely-watched 7-per-dollar level.
The key worry for investors is that China’s economy is losing momentum and there are persistent financial troubles in the real estate industry. Recent data suggest gross domestic product growth this year will be closer to the government’s target of about 5%, contrary to expectations of a large overshoot formed earlier in the year.
Meanwhile, UK government bonds led losses in Europe. Traders added to bets the Bank of England will keep raising interest rates after an unexpectedly strong reading of UK inflation Wednesday. Money markets are now pricing more than 100 basis points of additional tightening by December.
Key events this week:
- US initial jobless claims, GDP, Thursday
- Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
- Tokyo CPI, Friday
- US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures added 0.6% as of 6:55 a.m. New York time
- Nasdaq 100 futures rose 1.8%
- The Stoxx Europe 600 rose 0.1%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.3% to $1.0723
- The British pound was little changed at $1.2358
- The Japanese yen was little changed at 139.56 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $26,230.42
- Ether fell 1.1% to $1,784.98
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.76%
- Germany’s 10-year yield advanced one basis point to 2.48%
- Britain’s 10-year yield advanced 11 basis points to 4.32%
Commodities
- West Texas Intermediate crude fell 1.7% to $72.96 a barrel
- Gold futures rose 0.2% to $1,981.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Georgina McKay and Julien Ponthus.
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