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London open: Stocks rally after Nvidia beat
London stocks rallied in early trade on Thursday, taking their cue from an upbeat session on Wall Street after better-than-expected results from US chip designer Nvidia.
At 0830 BST, the FTSE 100 was up 0.8% at 7,377.92.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Despite a very high benchmark, Nvidia has beaten Wall Street’s expectations. The artificial intelligence boom is continuing to catapult demand for the tech company’s complex chips into the stratosphere, with sales of $16bn 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.
“Nvidia’s H100 chip, where demand is far outpacing supply, is currently selling for double its original price in the tens of thousands. Being an early beneficiary of a megatrend like AI is an enviable and rare opportunity, but bears will be arguing that at some point the valuation will start to appear full. Luckily for Nvidia, a cursory glance would suggest there aren’t many bears around.
“Nvidia smashing the forecast ceiling has also lifted the mood elsewhere. The FTSE 100 is off to a bright start where there’s little big-hitting domestic news to sway the atmosphere.”
Investors were also eyeing the release of US initial jobless claims at 1330 BST, and the start of the Jackson Hole symposium in Wyoming, in particular a speech by US Federal Reserve chair Jerome Powell.
In equity markets, Liontrust Asset Management surged to the top of the FTSE 250 as it emerged its takeover bid for GAM has failed, as the asset manager was unable to win enough backing from its shareholders.
Intertek gained after saying it had bought US-based PlayerLync Holdings for an undisclosed sum.
On the downside, Harbour Energy was weaker after the North Sea oil and gas producer trimmed annual production and capital expenditure forecasts due to drilling delays at its Beryl operations. It also posted a drop in half-year pre-tax profit to $429m from $1.49bn a year earlier, due to higher taxes after the government imposed a windfall levy on energy companies.
Recruiter Hays also lost ground as it lifted its full-year dividend and announced a special payout to shareholders, but gave a gloomy outlook and reported a drop in annual profits.
Aviva, Legal & General, Hammerson, Ibstock, St James’s Place, Auto Trader, Shaftesbury and OSB all fell as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | +2.39% | +17.60 | 755.20 |
| 2 |  |
Croda International Plc | +1.85% | +98.00 | 5,400.00 |
| 3 |  |
Bae Systems Plc | +1.51% | +14.80 | 995.80 |
| 4 |  |
Scottish Mortgage Investment Trust Plc | +1.51% | +10.00 | 674.00 |
| 5 |  |
3i Group Plc | +1.46% | +28.00 | 1,948.00 |
| 6 |  |
Segro Plc | +1.43% | +10.40 | 736.60 |
| 7 |  |
Ferguson Plc | +1.38% | +170.00 | 12,470.00 |
| 8 |  |
Fresnillo Plc | +1.37% | +7.60 | 560.60 |
| 9 |  |
Rolls-royce Holdings Plc | +1.34% | +2.70 | 204.50 |
| 10 |  |
Direct Line Insurance Group Plc | +1.28% | +2.05 | 161.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Aviva Plc | -2.26% | -8.60 | 372.00 |
| 2 |  |
Legal & General Group Plc | -2.18% | -4.80 | 215.20 |
| 3 |  |
Tui Ag | -1.76% | -9.00 | 502.50 |
| 4 |  |
St. James’s Place Plc | -1.31% | -11.40 | 861.60 |
| 5 |  |
Mondi Plc | -1.17% | -15.00 | 1,265.00 |
| 6 |  |
Crh Plc | -1.00% | -45.00 | 4,470.00 |
| 7 |  |
Glencore Plc | -0.76% | -3.30 | 429.85 |
| 8 |  |
Whitbread Plc | -0.73% | -25.00 | 3,407.00 |
| 9 |  |
Auto Trader Group Plc | -0.70% | -4.20 | 594.60 |
| 10 |  |
Admiral Group Plc | -0.67% | -16.00 | 2,373.00 |
US close: Stocks post solid gains, Nvidia jumps after the bell
US stocks closed with decent gains on Wednesday, as investors waited with anticipation for earnings figures from heavyweight tech group Nvidia, due out after the closing bell.
Nvidia’s shares closed up over 3% on the day ahead of its second-quarter results, taking its year-to-date gain to a whopping +229%. The company, a world leader in artificial intelligence computing, is being seen as a bellwether (and somewhat saviour) of market sentiment, following recent heavy losses over the past couple of weeks.
Neil Wilson, chief market analyst at Markets.com, said “clearly a lot is hanging on” the numbers.
After the market close, the stock surged a further 7% after the group posted an 88% quarter-on-quarter jump in revenue to $13.5bn, compared with the $11.2bn consensus forecast, while earnings per share shot up 148% to $2.70, smashing the $2.09 forecast. Meanwhile, the company said it expects to make $16bn in the third quarter, some $3.4bn ahead of analysts’ current expectations.
Back to Wednesday’s trading session, the tech-heavy Nasdaq closed 1.6% higher at 13,721, the S&P 500 gained 1.1% to 4,436.01, while the Dow rose 0.5% to 34,473. For the S&P 500, it was the index’s best daily performance since June.
Helping stocks higher were a drop in bond yields for the second consecutive day after 10-year Treasury yields hit a 16-year high of 4.339% on Monday. 10-year yields fell a further 13.6 basis points to 4.193% on Wednesday.
A survey out during the session showed that business activity fell to a six-month low in August. The S&P Global flash composite purchasing managers’ index declined to 50.4 from 52.0 in July, signalling the weakest upturn in activity since February.
Elsewhere, data from the Commerce Department showed that new home sales rose 4.4% to a seasonally-adjusted annual rate of 714,000 units in July. This was ahead of expectations of 705,000. Meanwhile, June’s sales were revised down to 684,000 from 697,000.
Nvidia leads tech stocks higher
Optimism around Nvidia’s results was helping sentiment across the wider tech sector, with blue chips Microsoft, HP and Apple posting big gains.
Foot Locker tanked 28% after the sporting goods retailer cut its full-year forecasts and posted weaker-than-expected second-quarter results. Nike, meanwhile, fell for the 10th straight session – a new record.
Peloton shares slid 23% to a record low after it reported a drop in fourth-quarter revenue, pointing to a slowdown in subscriber growth, and said the cost of its seat recall had “substantially exceeded” initial expectations.
Abercrombie & Fitch soared 24% after beating forecasts with second-quarter sales of $935m, and raising its guidance for full-year sales growth to 10%, from 2-4% previously.
Thursday newspaper round-up: Wilko, Virgin Media, Ofgem, John Lewis
The majority of Wilko stores are expected to shut with the loss of thousands of jobs after a white knight failed to step forward to rescue the collapsed retailer. The family-owned household and garden products retailer, which has about 400 stores and employs almost 12,500 people, will leave big gaps on high streets after the failure of talks with interested parties forced it to call in administrators this month. – Guardian
Virgin Media is facing calls for the telecoms watchdog to urgently investigate the legality of its broadband contracts, under which it can increase bills at any time and by unlimited amounts. The consumer champion Which? has concluded that Virgin Media’s terms and conditions may amount to unfair contract terms and could be in breach of the Consumer Rights Act. It has written to Ofcom calling on it to intervene. – Guardian
The Silicon Valley chipmaker at the heart of the new artificial intelligence (AI) boom has seen its profits surge 843pc as the world rushes to buy its technology. Nvidia increased net profit to $6.2bn (£4.9bn) in the three months to July 30, up from $656m recorded during the same period last year. The world’s largest chipmaker continues to benefit from the surging demand for processors able to fuel AI-powered bots, such as ChatGPT. – Telegraph
Ofgem has been accused of allowing energy companies to ramp up “unfair” charges after analysts warned that more than seven million households face higher heating bills this winter. Increases in standing charges and the loss of government subsidies compared to last year mean that millions of households that use relatively little gas and electricity will be worse off this year than last, the Resolution Foundation said. – Telegraph
John Lewis has finally submitted a planning application — eight months later than planned — for its biggest build-to-rent project, but has immediately run into fresh opposition from local residents. The retail group has been accused of underhand tactics and “rapacious” behaviour over its trailblazing plan to build 430 homes in towers up to 20 storeys high above its Waitrose supermarket in the west London suburb of Ealing. – The Times
