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LONDON MARKET OPEN: Stocks lifted by Nvidia results, US data

24th Aug 2023 08:54

(Alliance News) - Stock prices in London made gains at Thursday's open, bouyed by an outperformance from Nvidia late Wednesday, as well as a cautious optimism ahead of the Federal Reserve's Jackson Hole event.

The FTSE 100 index opened up 38.72 points, 0.5%, at 7,359.25. The FTSE 250 was up 149.88 points, 0.8%, at 18,376.37, and the AIM All-Share was up 2.48 points, 0.3%, at 736.95.

The Cboe UK 100 was up 0.5%, the Cboe UK 250 was up 0.7% at 16,085.75, and the Cboe Small Companies was marginally higher at 13,416.77.

Nvidia shares shined on Wednesday in after-hours trade in New York, adding 6.6%, after the chip maker reported "record" revenue in its hotly-anticipated second quarter results, with both its sales and earnings beating market forecasts.

The Santa Clara, California-based firm said revenue climbed to USD13.51 billion in the three months ended July 30, more than double from USD6.70 billion a year earlier. It also beat analyst consensus estimates of USD11.1 billion, as cited by CNN.

GAAP net income surged to USD6.19 billion from USD656 million, while GAAP diluted earnings per share multiplied to USD2.48 from USD0.26.

Nvidia also posted a rosy outlook, and said it would buy back USD25 billion of its shares.

"The artificial intelligence boom is continuing to catapult demand for the tech company's complex chips into the stratosphere, with sales of USD16 billion expected in the three months to October. That is streets away from analyst expectations and reflects the seemingly insatiable appetite for Nvidia's products, which are the leading option for creating AI tools like ChatGPT," explained Sophie Lund Yates, lead equity analyst at Hargreaves Lansdown.

In a positive read-across European semiconductors were making early gains, with STMicroelectronics up 2.0% and ASML up 2.7% in Milan, while Infineon added 1.3% in Frankfurt.

The CAC 40 in Paris was up 1.2%, while the DAX 40 in Frankfurt was up 1.0%.

Back in London, Liontrust Asset Management said its offer for GAM Holding is likely to be declared unsuccessful next Tuesday. The asset manager said a total of 53.3 million shares were tendered, around 33% of GAM, falling well short of the 66% minimum acceptance level. GAM shareholders had until Wednesday of this week to tender shares.

The offer had faced stern opposition from a major shareholder of GAM, which had maintained the prospective deal undervalued GAM.

Liontrust shares rose 7.7% in early trading, pushing it to the top of the FTSE 250 index.

Recruitment firm Hays fell 2.2%, as it reported a lower annual profit and a sharp slowdown in UK & Ireland markets.

Still, it said fees reached a new record, with net fees rising 8.8% to GBP1.29 billion from GBP1.19 billion a year before, or by 6% on a like-for-like basis. Pretax profit dropped 6.0% to GBP192.1 million from GBP204.3 million.

It also announced board member Dirk Hahn will take over as its new chief executive from next Friday. Hahn is currently managing director of its Germany and Continental Europe, Middle East & Africa arms.

Rolls Royce added 1.8% as UBS upped its price target by 75%, maintaining its 'buy' rating for the stock.

Elsewhere, there was little in the way of company news moving the needle in London. Though the mood was broadly upbeat, with most FTSE 100 companies in the green.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.5%, the S&P 500 up 1.1% and the Nasdaq Composite up 1.6%.

The latest purchasing managers' index surveys for the US pointed to a stagnation in business activity. The weaker data helped pare back interest rate expectations on Wednesday, as it served to prove the rate hikes implemented by the US Federal Reserve in recent months are starting to have the desired effect.

The weaker demand outlook from the US put further downward pressure on oil prices. Brent fetched USD82.84 a barrel early Thursday, lower than USD83.28 on Wednesday afternoon in London.

"Trend and momentum indicators remain comfortably negative, and the market conditions are far from the oversold territory, meaning that there is room for a deeper downside correction in oil prices," noted Swissquote's Ipek Ozkardeskaya.

The PMI data will be another data point for central bankers to consider as the Jackson Hole event gets underway later on Thursday.

"[The symposium] is poised to assume a role of paramount significance in steering global markets," considered SPI Asset Management's Stephen Innes.

"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."

The symposium will focus on the theme of "Structural Shifts in the Global Economy". Federal Reserve Chair Jerome Powell will speak on Friday.

Last August, his hawkish comments at the Wyoming event prompted a sharp sell-off in equities, with the Nasdaq sinking 3.9% on the day.

The dollar was slightly weaker against the pound and the euro in early exchanges.

Sterling was quoted at USD1.2705 early Thursday, higher than USD1.2698 at the London equities close on Wednesday. The euro traded at USD1.0858, higher than USD1.0850. Against the yen, the dollar was quoted at JPY145.10, up versus JPY144.66.

The positive mood music was also being felt in Asia on Thursday, as the Nikkei 225 index in Tokyo closed up 0.9%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong was up 1.9%. The S&P/ASX 200 in Sydney closed up 0.5%.

Gold was quoted at USD1,921.74 an ounce early Thursday, higher than USD1,916.27 on Wednesday.

Still to come on Thursday's economic calendar, there's the weekly US unemployment claims report at 1330 BST.

By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [email protected]

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