Market wrap: Nvidia surge causes string of new global share market records
WEEKLY MARKET REPORT
An overwhelmingly strong result from US artificial intelligence chipmaker Nvidia put a rocket under global technology stocks on Friday, leading to a string of record highs on global markets.
Australia was not one of the many markets although records were set in the US, Europe and Asia.
The ASX 200 still added 0.4% or 32.4 points to 7643.6 points on Friday, leading to a weekly fall of 0.2%.
Nvidia’s market value rose a staggering $421 billion in a single day – the largest on record for any US company – as markets caught the AI euphoria on the back of an apparent Nvidia profit turning point.
The chip maker’s quarterly profit soared to $12.3 billion with revenue leaping on the back of strong demand for its technology to power artificial intelligence.
Japan finally cracks through 35-year record
One of the most exciting market reactions to the Nvidia result was in Japan, with the Nikkei 225 up 2.2% to push through to an all-time high of 39,098.68 points, breaking a record that had stood since 1989.
The new record demonstrates that after Japan’s lost decades of a sluggish economy, the country’s share market has finally gained some sustainable momentum.
On Wall Street, the S&P 500 added 2.1% and closed at a record high of 5087.3 points while the Nasdaq Index jumped 3% to a record close of 16,041 points, while many European indices were also stronger.
Local tech stocks fly high
In line with the technology theme, one of the best local performers was Afterpay-owner Block (ASX: SQ2), with its December quarter revenue of US$5.8 billion (A$8.8 billion) comfortably above analyst estimates.
A successful cost-cutting drive also helped to drive Block shares up 16.5% to $117.94.
It was a similar situation for home internet provider Aussie Broadband (ASX: ABB), which comfortably thrashed forecasts for internet subscriber and profit growth.
Aussie Broadband shares jumped a stellar 18.6% on the news to $4.53.
Brambles adds to the positive results
Elsewhere, packaging business Brambles (ASX: BXB) reported some strong figures, raising its profit forecasts for financial 2024 and increased its underlying interim profit by 21% to $US664.7 million.
Lotto stakeholder Jumbo Interactive’s (ASX: JIN) rose 9% to $17.49 after it posted a better-than-expected adjusted profit of $20.8 million over the six months to December 31.
Significant deals continue to be announced with Woodside (ASX: WDS) shares closing flat at $30.51 after it agreed to a $2.1 billion deal to sell a 15% stake in its Scarborough LNG project to Japanese buyer JERA.
It wasn’t all sweetness and light with shares in shipbuilder Austal (ASX: ASB) down 14.6% to $1.90.
The main sticking point is that the company is trying to “negotiate a resolution with US authorities in order to avoid litigation” over fraud claims by the SEC about three former Austal employees,
The SEC claimed the three who were in senior roles with the company in the US from 2013 to 2016 had manipulated financial information to create the impression the shipbuilder was meeting its targets on a big US Navy contract.
While Austal said that to date it faced no indictments or charges, it also said that any settlement that avoided legal action was likely to involve a substantial financial penalty of “up to tens of millions of dollars” plus any costs relating to making investors whole who allege they were misled.
Austal reported first-half net profit of $12 million, up from a $7.3 million loss a year ago, but revenue fell 7% to $717 million.
It did not declare a dividend and it launches a large capital expenditure program to expand shipbuilding capacity and capability on the back of several major multi-billion-dollar contracts with the US Navy and Royal Australian Navy.
Small cap stock action
The Small Ords index slipped 0.21% to 2945.2 points.
ASX 200 vs Small Ords
The week ahead
Locally there are a lot of economic releases to watch out for that will expand knowledge about how the economy is going.
The main three are the monthly measure of consumer prices which is out on Wednesday and the business investment and retail trade numbers which are both out on Thursday.
The broad expectation is that the monthly CPI could ease in January due to price declines for travel and petrol, although the still hot housing sector could spring a surprise in the other direction.
In the US the Federal Reserve members are continuing to pour cold water on the chances of official interest rate cuts, although it doesn’t seem to have worried share market investors too much.
US data releases will include economic growth estimates on Wednesday and personal income/spending data on Thursday with the main interest in the inflation measure of core personal consumption expenditures (PCE) deflator which is the US Fed’s preferred inflation measure.
After a few weeks of pushing individual stocks and markets in both directions, the run of profit results from local and US companies is beginning to dry up in earnest, becoming a trickle in the US and tapering off locally.
In the US the main reports that might be interesting are Zoom Video, Salesforce, HP and Snowflake while some of the remaining local highlights include Adairs, nib, Kogan, Michael Hill, Kogan, TPG Telecom, Lynas Rare Earths, Suncorp, Coles, Appen, Woodside Energy, Zip, G8 Education, Flight Centre, Worley, Perpetual, Platinum Asset, Karoon Energy, Ramsay Health Care, Harvey Norman and Life 360.