ASX treads water as Wall Street unimpressed by Nvidia results

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket finished Thursday’s session flat following a mixed day on Wall Street ahead of the much-anticipated, and then underwhelming results of the world’s most valuable company, Nvidia.

The S&P/ASX 200 edged down 3.3 points, less than 0.1 per cent, to 8323 points, driven by losses in retailers such as Wesfarmers but mitigated by stronger results in the financial and IT sectors. Seven of its 11 industry sectors edged lower.

The Australian dollar saw marginal gains on Thursday, trading at 65.18 US cents. The ASX lost 0.6 per cent on Wednesday amid fears of an escalation in the Russia-Ukraine war.

Nvidia released its results after the closing bell in New York.Credit: Bloomberg

The lifters

Financial stocks were largely trading higher, with Westpac making the largest gains among the big four banks (up 1.5 per cent), while NAB (up 0.5 per cent) and ANZ (up 0.3 per cent) also returned positive results. Commonwealth Bank slipped 0.1 per cent, while insurer QBE climbed 1.8 per cent.

Energy stocks rose after oil prices steadied overnight. Woodside gained 0.5 per cent, while rival Santos advanced by 0.2 per cent. Origin Energy enjoyed a 0.7 per cent surge, while Meridian Energy ended the session flat.

West Texas Intermediate traded near $US69 a barrel after closing 0.7 per cent lower on Wednesday, while Brent settled below $US73, US crude inventories rose by 545,000 barrels last week, according to government data. The volume was significantly smaller than figures flagged by an industry report.

The laggards

Bunnings and Kmart parent Wesfarmers shed 1.4 per cent, while apparel brands company Premier Investments lost 1.9 per cent. Supermarket giant Woolworths also fell, closing down 0.9 per cent.

Australia’s tech stocks observed a mixed day following the release of US tech heavyweight Nvidia’s long-awaited earnings after the close of trading on Wall Street. The giant had met the market’s third-quarter revenue expectations, but fell short of the highest estimates for future revenue, sending its shares lower in after-hours trading in New York.

NextDC and Xero both saw their shares decline by 0.9 per cent and 0.3 per cent, respectively, though WiseTech edged up 0.3 per cent. Software firm TechnologyOne bucked the lacklustre trend among its tech peers with a 1.2 per cent gain, while family-member tracking app Life 360 was up 0.8 per cent.

Web Travel Group – created after demerging from Webjet earlier this year – saw its shares drop 4.2 per cent after it said its half-year results, which were scheduled to be released on Wednesday, would be delayed and previous financial reports would be amended following a decision by its auditor. Flight Centre shed 1.3 per cent.

GQG Partners plunged 19.3 per cent after the boutique investment fund manager said it was monitoring US bribery charges brought against India’s Adani Group, which GQG has a nearly 20 per cent stake in.

The lowdown

Nvidia’s earnings outlook rippled across its suppliers and global markets, given the company’s size and role in the artificial intelligence boom. Geopolitical tensions also loomed over markets after Ukraine fired British cruise missiles at military targets inside Russia for the first time.

Nvidia assured investors that its new product lineup can maintain the company’s AI-fuelled growth run, though the rush to get the chips out the door is proving more costly than expected and would weigh on profit margins.

Production and engineering costs associated with Nvidia’s new Blackwell chips had raised nervousness among investors, IG market analyst Tony Sycamore noted.

“Following this week’s escalation in European geopolitical tensions [...], there has been enough reason for some movement to the sidelines,” he said.

According to Tiger Brokers Australia chief strategy officer Greg Boland, “all eyes” had been on Nvidia, whose earnings are seen as a bellwether to gauge if the AI craze is proven or overblown. The report had disappointed some lofty expectations, he said.

On Wall Street overnight – before Nvidia’s earnings were released – US stocks drifted to a mixed finish, though the modest moves for indexes masked some thrashing underneath the surface. The S&P 500 finished the day virtually unchanged after coming back from a loss of 1 per cent during the morning. The Dow Jones eked out a gain of 139 points, or 0.3 per cent, and the Nasdaq composite slipped 0.1 per cent.

Retail giant Target’s 21.4 per cent tumble followed its report showing weaker profit and revenue for the latest quarter than analysts expected. The retailer also gave a forecast for profit in the upcoming holiday season that was below analysts’ estimates.

On the winning end of Wall Street was Williams-Sonoma, which jumped 27.5 per cent after the parent of Pottery Barn delivered better profit and revenue for the latest quarter than analysts expected.

Bitcoin set another all-time high, supported by a series of developments highlighting the deepening embrace of the digital-asset industry under crypto cheerleader Trump.

Tweet of the day

Quote of the day

“We have revised our view of the most likely scenario for the path of the RBA’s cash rate, pushing out the start date of the rate-cutting cycle from February to May.”

That’s Westpac chief economist Luci Ellis, sharing the bank’s updated prediction for when the RBA would make its first interest rate cut.

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With AAP, AP, Reuters

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