Nvidia earnings due after the close

Global markets are trading with a cautious tone this morning as investors digest a combination of economic data and looming earnings catalysts. Overnight in Asia, the Hang Seng slipped over 1% as Chinese industrial profits for July came in weaker than expected, underscoring persistent deflationary pressures in the world’s second-largest economy. Meanwhile, the Nikkei managed modest gains, supported by a softer yen that continues to boost Japanese exporters, though rising government bond yields are keeping a lid on enthusiasm. In Europe, early trade is tilted lower with the Eurostoxx, DAX, and Ibex losing ground ahead of tomorrow’s ECB minutes and Friday’s CPI data.

In the US, futures are showing a moderate decline at the open following yesterday’s gain that took the S&P 500 near record highs. With GDP and core PCE inflation data due in the coming days, treasury yields remain stubbornly high, with the 10-year remaining above the 4.2% mark. Trump has continued to pressure the Fed in a bid to shape monetary policy, although Lisa Cook wont go down without a fight. The questions over FOMC independence are likely to keep longer dated bond yields elevated for the time being, and that has helped drive USD strength as the DXY hits a fresh high for the week.

Today’s main event likely comes after to US close, with earnings from Nvidia largely wrapping up the second quarter US earnings season. The incredible rise of Nvidia has taken the company from a $1 trillion valuation to over $4 trillion market cap in just two-years. Whilst markets are constantly second guessing when this gravy train will come to a halt, the persistent ability to beat market earnings expectations has helped drive the stock on its upward trajectory. This time around there will be plenty of focus on both the backwards looking data, but also a significant focus on how the company sees the second half of 2025. While Trump has allowed the export of H20 chips (with a 15% tax), the Chinese government have ensured that companies look elsewhere. As such, a significant focus will be on how Nvidia plans to overcome this hurdle by developing a new chip for the Chinese market. Meanwhile, traders will be watching closely for updates on demand for the Blackwell chips, with the company expecting this new product will provide a fresh source of demand going forward.