Nvidia’s earnings on Wednesday will set the tone for a potential AI rally and improved risk appetite now that markets are braced for rate cuts.
Anything other than an eye-watering growth forecast will likely unnerve investor confidence, but until then, markets will be jittery and choppy. Focus will be on Europe’s technology stocks, after the tech index (.SX8P), opens new tab slid 1% on Monday.
Another thing to watch for will be how European markets react to lacklustre earnings from Temu-owner PDD Holdings (PDD.O), opens new tab that underscored weak demand from Chinese consumers, wiping out $55 billion in market capitalisation.
European luxury companies have also been hit by reduced spending from Chinese consumers.
The U.S. personal consumption expenditure price index – the Fed’s preferred gauge of inflation – is due on Friday and will be closely scrutinised especially after Fed Chair Jerome Powell all but confirmed a rate cut in September.
Markets are only concerned about the size of the cut – will it be a 25 bp cut or a bigger 50 bp cut next month. Traders are pricing in 100 bps of easing for the rest of the year’s three Fed meetings. Data will decide where the Fed heads.
