Market responses to geopolitical tensions and economic changes
After Federal Reserve Chairman Jerome Powell revealed the decision to initiate interest rate cuts, the market reacted promptly and extensively. Stocks climbed, interest rates fell, and gasoline prices also experienced a reduction, despite a minor increase in oil prices on Friday. While it marked a favorable day for the markets, the underlying tension was evident.
Adding to the instability, Israel commenced attacks on Hezbollah positions in southern Lebanon early Sunday morning. By 12 a.m. ET Sunday, no information regarding casualties was available, rendering the potential consequences for global markets uncertain. This geopolitical strain further contributes to an already tense environment, with ongoing layoffs in various sectors, including technology, and an increasing number of small business bankruptcies.
The U.S. presidential and national election campaigns are poised to escalate over the Labor Day Weekend, complicating the global scenario even further. The ongoing conflict between Ukraine and Russia also presents a considerable risk, potentially escalating into a more perilous situation.
Important earnings reports to monitor this week
As we look forward to the week, several crucial earnings reports are anticipated to attract the focus of investors, especially those with interests in the Australian market. Nvidia, the technology leader recognized for its state-of-the-art GPUs, is expected to be a central topic. The company has experienced its shares soaring by 161.2% in 2024, closing at 9.37 on Friday. With a market capitalization of .182 trillion, Nvidia has now become the second-largest U.S.-based company, surpassed only by Apple. The company is anticipated to report earnings of 64 cents per share, representing a remarkable 156% increase compared to the 25 cents per share reported a year prior. Revenue is expected to reach .6 billion, a 110% increase year-over-year. The demand for Nvidia’s Hopper GPUs, alongside the forthcoming Blackwell family of GPUs, is fueling this expansion. However, there may be a challenge: the release of the Blackwell GPUs, initially anticipated for the end of the year, could be delayed until March 2025 due to design issues. This setback might affect the strategies of major companies like Microsoft, Meta Platforms, and Alphabet, all of which have pledged substantial investments in these GPUs.
Another notable company to keep an eye on is CrowdStrike, a prominent cybersecurity firm. The company is set to unveil its earnings concurrently with Nvidia. CrowdStrike has garnered attention recently due to an erroneous update issued in July, which resulted in widespread computer outages, notably impacting airlines such as Delta Air Lines. Nevertheless, CrowdStrike’s stock has rebounded, climbing 35% since its intraday low on August 5. For the year, the stock has increased by 6.4%. The company is projected to report fiscal second-quarter earnings of 97 cents per share, a 31% rise from a year ago, with revenue expected at 8.6 million, a 30% increase from 1.5 million the previous year.
Additional companies reporting this week include Nordstrom, Salesforce, HP Inc., NetApp, Dell Technologies, Marvell Technology, and Lululemon Athletica. Nordstrom is anticipated to report earnings of 74 cents per share, down from 84 cents a year ago. Salesforce is expected to post earnings of .73 per share, an increase from .63. HP Inc. is forecasted to report earnings of 86 cents, unchanged from the previous year. NetApp is projected to report earnings of .15, up from 84 cents a year ago. Dell Technologies is expected to announce earnings of .49, up from .44. Marvell Technology’s earnings are expected to be 13 cents, down from 18 cents last year. Lululemon Athletica is expected to report earnings of .94, an increase from .68.
