Nvidia earnings spark rare share price fall across US tech stocks

Published

7 months ago

August 28, 2024

admin

US tech stocks are falling despite Nvidia, the chipmaker driving the artificial intelligence (AI) led stock market boom, reporting stronger than expected earnings.

The company, which has been the darling of US markets with shares up 150% this year alone, reported second quarter revenue of just over $30bn – more than double the sum achieved in the same period a year ago.

Nvidia‘s crucial forecast for sales in the current quarter, $32.5bn, also beat estimates.

Money latest: Capital gains tax hike on the way, leading advisory firm says

But its shares suffered a rare decline in value following an earnings update, of up to 6.8% in after-hours dealing.

That built on losses of more than 2% during Wednesday’s main trading hours.

Customers, including Meta and Amazon, were also hit but the red figures were around the 1% mark for both.

The fortunes of Nvidia, which holds 80% of the AI chip market, are being closely-watched for signals that the big investment opportunity that is AI remains on a solid upwards curve.

Confidence wobbled at the start of August when US data raised fears of a recession, sparking a short-lived but sharp global stock sell-off that sent investors towards safe-haven government bonds.

For Nvidia a recession, while seen as very unlikely, would be a risk to demand for AI and, therefore, its products.

Its prospects and success to date has earned it a lofty market value of $3.2trn, according to LSEG data.

The shares are 3,000% up since 2019.

But the meteoric rise, that has left Nvidia just behind Apple in terms of market value, has raised fears of a repeat of the dot-com bubble bursting two decades ago.

Tech stocks have outperformed the market and are seen as vulnerable to shocks on a value versus earnings basis.

Worries over a design-led delay in the launch of Nvidia’s upcoming Blackwell chips have contributed to recent price wobbles, though the shares have largely held up as its existing Hopper chips were seen as filling any short term void.

Nvidia said on Wednesday that it had already shipped Blackwell pilots to customers and partners. It expected sales to ramp up from the end of the year.

Traders in the US equity options market had expected the earnings report to spark a more than $300bn swing in the shares in advance of the release being made public.

But analysts said that the share price declines seen instead may reflect jitters on the value question.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of the update: “Nvidia continues to defy gravity with its seventh straight quarter beating expectations on both the top and bottom line, showing a masterful delivery of performance and guidance from Jensen Huang and the Nvidia team.

“But early trading suggests that’s not enough to keep the market happy. It’s less about just beating estimates now, markets expect them to be shattered and it’s the scale of the beat today that looks to have disappointed a touch.”

Business

Insurer Hiscox lines up chairman months after Bayesian sinking

Published

17 hours ago

April 7, 2025

admin

Hiscox, the London-listed insurer, is close to naming a new chairman nearly eight months after the drowning of Jonathan Bloomer on the luxury yacht of technology tycoon Mike Lynch.

Sky News has learnt that Hiscox has narrowed its search to candidates including Richard Berliand, who chairs the interdealer broker TP ICAP.

Insurance insiders said that Mr Berliand was among fewer than a handful of potential successors to Mr Bloomer.

The sinking of the Bayesian off the Sicilian coast last August claimed the lives of Mr Lynch and his daughter, along with five other passengers, including Mr Bloomer.

A former boss of Prudential, Mr Bloomer was a well-liked figure in the City.

He had chaired Hiscox for just a year when he died.

The identities of the other candidates being considered by the company were unclear on Monday.

Hiscox, which has a market capitalisation of just over £3.8bn, has seen its shares slip by about 12pc over the last year.

It was founded as a single underwriter at Lloyd’s in 1901.

A Hiscox spokesperson declined to comment.

Business

Asian stock markets tumble – with Hong Kong’s Hang Seng index suffering worst fall for 28 years

Published

22 hours ago

April 7, 2025

admin

Asian stock markets tumble - with Hong Kong's Hang Seng index suffering worst fall for 28 years

Asian stock markets have fallen dramatically amid escalating fears of a global trade war – as Donald Trump called his tariffs “medicine” and showed no sign of backing down.

Hong Kong’s Hang Seng index of shares closed down 13.2% – its biggest drop since 1997, while the Shanghai composite index lost 7.3% – the worst fall there since 2020.

Taiwan’s stock market was also hammered, losing nearly 10% on Monday, its biggest one-day drop on record.

Elsewhere, Japan’s Nikkei 225 lost 7.8%, while London’s FTSE 100 was down 4.85% by 9am.

Tariffs latest – FTSE falls after Asian markets tumble

US stock market futures signalled further losses were ahead when trading begins in America later.

At 4am EST, the S&P 500 futures was down 4.93%, the Dow Jones 4.32% and the Nasdaq 5.33%.

Markets are reacting to ongoing uncertainty over the impact of President Trump’s tariffs on goods imported to the US, which he announced last week.

Speaking on Air Force One on Sunday, Mr Trump said foreign governments would have to pay “a lot of money” to lift his tariffs.

“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said.

The US president said world leaders were trying to convince him to lower further tariffs, which are due to take effect this week.

“I spoke to a lot of leaders, European, Asian, from all over the world,” Mr Trump told reporters.

“They’re dying to make a deal. And I said, we’re not going to have deficits with your country.

“We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”

Mr Trump, who spent much of the weekend playing golf in Florida, posted on his Truth Social platform: “WE WILL WIN. HANG TOUGH, it won’t be easy.”

President Trump believes his policy will make the US richer, forcing companies to relocate more manufacturing to America and creating jobs.

However, his announcement has shocked stock markets, triggered retaliatory levies from China and sparked fears of a global trade war.

Reality hits that trade war no longer just a threat

China’s announcement of its tariff retaliation came late afternoon on Friday local time.

Most Asian markets closed shortly after – and markets in China, Hong Kong and Taiwan were closed for a public holiday – meaning the scale of the hit did not play out until today.

This morning we are getting a sense of the impact. Dramatic falls across all Asian markets clearly signal a realisation a global trade war is no longer just a threat, but a reality here to stay, and a global recession could yet follow.

Up until Friday, China’s response to Donald Trump’s tariffs had been perceived as restrained and designed to avoid escalation, the markets had reacted accordingly.

But that all changed last week when Mr Trump’s new 34% levy on all Chinese goods was matched by China with an identical tax. Both sit on top of previous tariffs levied, meaning many goods now face rates in excess of 50%.

These are numbers that make most trade between the world’s two biggest economies almost impossible and that will have a global impact.

China has clearly decided any forthcoming pain will have to be managed, and not being seen to be cowed and bullied by Mr Trump is being deemed more important.

But the scale of the retaliation will have further spooked the markets as it makes the prospect of negotiation and retreat increasingly unlikely.

Mr Trump added to the atmosphere of intransigence when he told the media on Sunday the trade deficit with China would need to be addressed before any deal could be done. The complete lack of concern from the White House over the weekend will also not have helped.

While smaller economies like Japan, South Korea, Cambodia and Vietnam are all lining up to attempt to negotiate, there are a lot of nations in that queue.

There is a sense none of this will be easily rectified.

US customs agents began collecting Mr Trump’s baseline 10% tariff on Saturday.

Higher “reciprocal” tariffs of between 11% and 50% – depending on the country – are due to kick in on Wednesday.

Investors and world leaders are unsure whether the US tariffs are here to stay or a negotiating tactic to win concessions from other countries.

Richard Flax, chief investment officer at wealth manager Moneyfarm, said: “I guess there was some hope over the weekend that maybe we would see this as part of the start of a negotiation.

“But the messages that we’ve so far seen suggest that the President Trump is comfortable with the market reaction and that he’s going to continue on this course.

Goldman Sachs has raised the odds of a US recession to 45%, joining other investment banks that have also revised their forecasts.

Follow Trump 100 on your podcast app

In the UK, Sir Keir Starmer has promised “bold changes” and said he would relax rules around electric vehicles as British carmakers deal with a new 25% US tariff on vehicles.

The prime minister said “global trade is being transformed” by President Trump’s actions.

KPMG has warned tariffs on UK exports could see GDP growth fall to 0.8% in 2025 and 2026.

The accountancy firm said higher tariffs on specific categories, such as cars, aluminium and steel, would more than offset the exemption on pharmaceutical exports, leaving the effective tariff rate around 12%.

Yael Selfin, chief economist at KPMG UK, said: “Given the economic impact that tariffs would cause, there is a strong incentive to seek a negotiated settlement that diminishes the need for tariffs.

“The UK automotive manufacturing sector is particularly exposed given the complex supply chains of some producers.”

Business

Trump’s tariffs: A negotiating tactic or the start of an ‘economic nuclear winter’?

Published

24 hours ago

April 7, 2025

admin

Trump's tariffs: A negotiating tactic or the start of an 'economic nuclear winter'?

Traders called this morning a complete bloodbath as the UK’s FTSE 100 joined world indexes in turning red as uncertainty over Donald Trump’s tariffs continued to batter stock markets.

Across Asia and Europe, hundreds of billions have been wiped off companies’ values, particularly in banking and manufacturing.

The cause is not just the imposition of those tariffs (the largest the US has inflicted since the 1930s) and the very obvious drag this will have on global trade and growth, but also the uncertainty of ‘what next?’.

Trump tariffs latest: Musk shares video about ‘essential’ free market

Investors cannot work out if the Trump administration is genuinely wedded to tariffs on this scale, on the proviso that they will help re-shore companies and millions of jobs to the United States.

They don’t know if they are permanent or merely part of a negotiating tactic to address trade imbalances, and for America to use its economic heft to strike better deals.

If Mr Trump is open to deals (the first test comes later in a meeting with the Israeli prime minister), markets will calm, even if the midst of uncertainty hasn’t fully cleared.

However, if this is a genuine rewiring of global trade and the end of globalisation as we know it, markets and economies will continue to get battered.

As one Trump supporter, billionaire Bill Ackman – who opposes the tariffs – put it, President Trump has launched a “global economic war against the whole world” that will usher in an “economic nuclear winter.”

It’s time for all of us to buckle up.