Authors: Medha Singh and Ankur Banerjee
(Reuters) – Global stocks fell on Thursday after revenue growth forecast by AI leader Nvidia (NASDAQ:) failed to excite investors, while the dollar strengthened and bitcoin hit a record high, fueled by hopes about U.S. President-elect Donald Trump’s policies .
Geopolitical concerns sparked by the escalating Ukraine-Russian conflict earlier this week dampened risk sentiment, lifting safe-haven gold and boosting oil prices.
However, the focus was on the profits of Nvidia, the world’s most valuable company, which forecast the slowest revenue growth in seven quarters. Futures on the tech-adjacent Nasdaq fell 0.6% and pan-European futures fell 0.3%.
MSCI’s gauge of global stocks fell 0.1% after trading in a range for most of the week.
“While we don’t doubt there will be strong demand for Nvidia’s products, that doesn’t mean the growth rates will be sustained, which is what investors care about,” said Michael O’Rourke, chief market strategist at JonesTrading.
“No company experiences this kind of growth indefinitely.”
Indeed, Nvidia’s fourth-quarter forecast indicated that the company’s revenue growth would snail-paced to about 69.5% from 94% in the third quarter. Demand for the company’s AI chips, which dominate the market, remains high.
Charu Chanana, chief investment strategy officer at Saxo, said that Nvidia’s earnings clearly indicate that the dynamics of artificial intelligence development are only increasing, and the main opposing factor is supply, not demand.
“Structural headwinds in AI development may continue to be a key driver of share prices next year.”
Elsewhere in Asia, stock exchanges in China and Hong Kong were mixed, while technology stocks in Taiwan fell 0.6%.
Attention also focused on Indian conglomerate Adani Group after U.S. prosecutors said Gautam Adani, the group’s billionaire chairman, had been indicted in New York over his role in an alleged multibillion-dollar bribery and fraud scheme.
The news reduced the market value of Adani Group companies by $30 billion and dragged down India’s benchmark equity indices.
GROWING DOLLAR
The dollar has been rising since the U.S. election on expectations that the Trump administration’s proposed tariffs are likely to be inflationary and keep rates high for an extended period of time.
The index, which measures the U.S. currency against six rivals, was at 106.62, not far from the yearly high of 107.07 it hit last week. Since the November 5 elections, the index has increased by over 2%. [FRX/]
The prospect of a slowdown in the Federal Reserve’s interest rate cut cycle also strengthened the dollar. According to CME’s FedWatch Tool, markets were pricing in the Fed’s 25-basis-point cut in borrowing costs next month at 55.7%, up from 72.2% just a week ago.
Two Federal Reserve chairs on Wednesday offered competing visions for where U.S. monetary policy might be headed, with one citing inflation concerns and the other expressing confidence that price pressures will continue to ease.
“The markets are waiting for some direction. Stock markets look a bit optimistic here. We hope that the next data will show some direction,” said Peter Schaffrik, global macro strategist at RBC Capital Markets.
Attention will also focus on Friday’s survey of the economic climate in the euro zone, which may provide clues as to the European Central Bank’s policy path in the face of the threat of the bloc’s currency breaking below 1.05 against the dollar, Schaffrik said.
On Friday, the common currency briefly breached this level and has been trending sideways since then. It was last at $1.053175.
The rise in the value of the dollar brought the Japanese yen back into intervention territory, leading to verbal warnings from officials. The Japanese currency strengthened to 154.54 per dollar on Thursday after falling as low as 155.86 in the previous session.
has been in shambles since the election as the Trump administration is expected to relax regulations and be cryptocurrency-friendly.
The world’s largest cryptocurrency, bitcoin, rose to a record high of $97,902 and was slightly lower at $97,611.
In commodities, oil prices rose on supply concerns sparked by the ongoing war between Russia and Ukraine.
futures strengthened about 1% to $73.61, while U.S. West Texas Intermediate crude oil futures gained 1.3% to $69.63. [O/R]
Gold prices rose for the fourth consecutive session on demand for protected assets. rose 0.6% to $2,665 an ounce. [GOL/]
