Stocks in London ended in the red on Wednesday, as the market eagerly awaited the earnings from chipmaker and AI-play Nvidia.
The FTSE 100 index ended down just 1.61 points at 8,343.85. The FTSE 250 declined 95.20 points, or 0.5%, at 21,066.87, and the AIM All-Share closed down 8.88 points, or 1.1%, at 770.30.
The Cboe UK 100 ended down 0.1% at 834.14, the Cboe UK 250 fell 0.4% at 18,566.65, and the Cboe Small Companies rose 0.1% at 17,007.56.
In European equities on Wednesday, the CAC 40 in Paris rose 0.2%, while the DAX 40 in Frankfurt ended up 0.5%.
In New York, the Dow Jones Industrial Average traded 0.1% lower at the time of the closing bell in Europe. The S&P 500 was down 0.6%, while the Nasdaq Composite shed 1.4%.
‘In part, this is a case of giving back their recent gains, with markets becoming increasingly cautious that any recent gains may be unjustified in the event of a Nvidia-led reversal. In a week that sees the crucial core [personal consumption expenditures] inflation gauge released, it will instead be the release of Nvidia earnings after the bell today that will likely provide the key driver of sentiment for global markets. With over 96% of the S&P 500 having reported their second quarter earnings, today’s Nvidia announcement provides the last major hurdle for markets to overcome if they are to continue on the upward trajectory that has regularly led indices into fresh highs,’ Scope Markets analyst Joshua Mahony commented.
‘The fear coming into this earnings report is the unforgiving nature of market expectations, with the company priced for perfection. Markets will want to see the already incredible pace of growth maintained or bettered, despite the fact that such expansion is quite clearly unsustainable. Any signs that Nvidia’s growth may have peaked could yet cause widespread losses for equities, providing a potential sign that the AI trade has started to ease off. Nonetheless, it takes a brave person to bet against this incredible company, with Nvidia having beat earnings estimates on each of their last six quarters. The rampant AI spending seen throughout the tech sector provides a tailwind that shows no signs of stopping thus far, and markets will be crossing their fingers for another bumper earnings report that keeps the gravy train going for the time being.’
Going into the results, Nvidia shares were 3.0% lower in New York.
The pound was quoted at $1.3204 late on Wednesday afternoon in London, down compared to $1.3230 at the equities close on Tuesday. The euro stood at $1.1128, down against $1.1162. Against the yen, the dollar was trading at JP¥144.38, up compared to JP¥144.27.
‘The dollar is getting more traction,’ Brown Brothers Harriman analysts commented.
‘With the US labour market looking solid, we continue to believe that market expectations for aggressive Fed easing remain overdone. We also continue to believe that the divergence story remains in place (supported by the August PMIs) and should eventually support the dollar. While we believe that the dollar remains vulnerable until the dovish Fed narrative changes, its recent resilience is encouraging.’
In London, GSK shares rose 2.1%. The London-based pharmaceutical company welcomed the Delaware Supreme Court’s decision to review the Delaware Superior Court’s decision allowing the introduction of plaintiffs’ expert evidence at trial regarding heartburn drug Zantac, which had been pulled off the market in 2020 at the request of the FDA.
The Delaware Supreme Court will review the Delaware Superior’s Court decision according to the Daubert standard, which in the US provides criteria for evaluating whether expert testimony is admissible.
Zantac had been pulled off the market after low levels of a ‘probable carcinogen’ were found in samples. The carcinogen, known as NDMA, is not harmful in very small amounts. However, tests showed that there were excessive quantities of NDMA in ranitidine, otherwise known as Zantac. Multiple litigations have followed.
GSK said Wednesday: ‘The scientific consensus remains that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer. Since 2019, there are 16 epidemiological studies looking at human data regarding the use of ranitidine, including outcomes for more than 1 million patients using ranitidine, supporting this consensus.’
Miners, which had traded higher at the start of the abbreviated week in London on Tuesday, put pressure on the FTSE 100 by falling on Wednesday.
Anglo American fell 1.9%, while Antofagasta lost 6.0%.
Brent oil was quoted at $78.91 a barrel at the time of the London equities close on Wednesday, down from $80.07 late Tuesday. Gold was quoted at $2,507.11, an ounce, lower against $2,517.10.
Gold miners tracked the precious metal price lower. Fresnillo fell 1.4%, while Hochschild Mining shed 8.4%.
Hochschild said Wednesday it swung to a $69.4 million pretax profit in the first half that ended June 30 from a $66.1 million pretax loss last year.
Revenue increased 25% to $391.7 million from $314.0 million.
Chief Executive Officer Eduardo Landin said: ‘I am pleased to report on an encouraging first half performance. We are delighted to have brought Mara Rosa into commercial production, an asset which underpins our strategy of increasing production and lowering costs. With Inmaculada enjoying a strong 2024 so far, as well as higher underlying commodity prices, we have delivered substantial improvements in our financial metrics compared to last year.’
Focusrite slumped 18%. It said challenging conditions hurt earnings, with rising shipping and freight costs expected to continue going forward.
The High Wycombe, England-based company provides music and audio hardware and software to the entertainment industry.
Focusrite expects to report a 12% decline in revenue to £157 million for financial year that ends on Saturday from £178.5 million a year prior. It said this is in line with market expectations.
Earnings before interest, tax, depreciation and amortisation is expected at £25 million, down 32% from £36.9 million, due to shipping and logistics challenges as well as ‘various pressures on product margins’.
Thursday’s economic calendar has a US gross domestic product reading at 1330 BST, after German inflation data at 1300 BST.
The local corporate diary has annual results from miner South32.
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