Nvidia on memory, Europe on compute and Gas, Hormuz on transits and Oil flows

EU mid-market update: Everyone is short on something; Nvidia on memory, Europe on compute and gas, Hormuz on transits and oil flows.

Notes/observations

- Nvidia has moved the AI trade from demand to supply, and the bottleneck is memory. The quarter beat clearly on both lines and next-quarter guidance came in far above consensus, but the call did the work: management previewed FY28 revenue growth well above what the street had modelled while calling the outlook supply-constrained, with bottlenecks expected through at least the end of that year and customer indications running above what the chain can deliver. Purchase commitments more than doubled on the quarter, almost entirely memory, and gross margins were reset lower into a Q4 trough on scarcity and price rises beyond prior assumptions. China compute is out of the forecast altogether. Reports that Nvidia is in talks for Hugging Face at more than $13B followed within hours. Salesforce beat sharply and raised full-year guidance by a wide margin on AI and data revenue that has more than tripled on the year; CrowdStrike beat marginally and raised. Equity read-through is European technology and semi-cap; the less comfortable one is that memory pricing is now a cost line for hardware and industrials everywhere. Germany's digital minister said the country is simply short of compute.

- A few things investors may miss in NVIDIA’s 10-Q and CFO commentary: customers now take about 60 days to pay NVIDIA, up from 45 days last quarter, because NVIDIA is granting longer terms on large multi-quarter deals—small accounting line, but it means NVIDIA is increasingly helping carry the financing burden of the AI buildout. The same filings show $25B of data-center leases not yet started and another $20B intended to be handed off to third parties, evidence that NVIDIA is now securing land, power and shell capacity to make sure future GPU demand can actually be deployed. Rubin makes that especially important because NVIDIA requires site certification, including proof that sufficient power is available, before shipping new rack systems; at these rack densities, the bottleneck can move from making the chip to having a building capable of switching it on. And NVIDIA’s comment that memory should remain constrained only through FY28 / roughly end-2027 suggests HBM may loosen before power, permitting and customer financing do—meaning the next AI shortage may be usable megawatts, not GPUs.

- Politico reports the White House is considering a much broader second round of semiconductor tariffs that could reach beyond chips into servers, laptops, gaming consoles and other chip-heavy end products, while stripping out many of the exemptions previously contemplated for data centers, R&D and startups. That would turn the policy from a semiconductor-manufacturing incentive into something closer to a tax on U.S. compute deployment, because domestic fabrication cannot yet replace the imported advanced-chip base. Even after TSMC’s planned $265bn Arizona investment, the company expects only about 30% of its leading-edge capacity to be in the U.S. at full build-out, much of it years away. For SMH, the important split is no longer simply U.S. versus foreign chipmakers, but who can qualify enough of the finished system as domestic before tariffs start raising the cost of the entire AI hardware stack.

- New Zhipu’s GLM-5.3-Flash suggests China may be narrowing the AI hardware gap without first closing the chip gap: a 320B MoE activates only ~18B parameters per token, linear/sparse attention slashes KV traffic, and distributed expert routing turns interconnect bandwidth into a substitute for scarce HBM. Its reported 3× serving gain on unchanged domestic hardware is the more important signal than any single benchmark—software, quantization, phase-splitting and better kernels are extracting materially more useful inference from each imperfect accelerator, while Huawei is independently pushing the same idea at system scale with giant low-latency SuperPoDs. The sanctions metric may therefore be drifting away from FLOPS per chip toward useful tokens per megawatt and per datacenter: China does not need an H200-equivalent transistor if architecture, networking and software let a large fleet of weaker chips behave like a competitive machine.

- Asia's tightening cycle is broadening even as the activity data softens. The Bank of Korea raised as expected but not unanimously, one member dissenting for a hold, with guidance pointing to more hikes at a slower cadence, the sell side is split between October and the first quarter of next year. The Philippines delivered a third consecutive hike, Remolona calling it preemptive and saying he hopes not to need another, with El Nino flagged as the upside risk. Himino said the BOJ should keep raising and that upside price risks deserve more attention, declining to engage with market pricing, hawkish framing ahead of Tamura at Jackson Hole. Bangkok alone is neutral, warning the next move could go either way. Growth side is not cooperating: Australian capex contracted sharply against expectations of a modest gain, the drop concentrated in data-centre equipment after a record quarter, and Chinese industrial profits decelerated clearly on both the monthly and year-to-date measures. Channel into Europe is the front end and the yen, an imported hawkish signal, arriving while crude falls on Iran-Oman transit talks and a Qatari visit to Tehran, and while European gas near five-month highs has displaced oil as the bond market's inflation worry.

- Europe's own data ran firmer than the mood, and the week's risk is still ahead. German consumer confidence beat clearly with the prior revised up, though the series has not printed positive since 2021; Austrian manufacturing extended its expansion into a fifth month and accelerated markedly; Norwegian growth beat clearly. Euro-zone money supply missed marginally, but lending to firms accelerated. French producer prices jumped after a fall, Hungarian wage growth slowed sharply, Finnish confidence improved.

- Corporates provided the direction: Delivery Hero raised across every line; Pernod Ricard missed marginally with the Americas sharply lower and guided initial next-year revenue flat.

- Ahead: Jackson Hole opens, with the guest list tonight and Warsh's first keynote as chair on Friday, alongside Tokyo CPI.

- Tail risks: A tanker was struck in the Strait of Hormuz and transits remain below their ten-day average, with Tehran insisting the waterway stays shut absent US concessions; Peskov promised a harsh response to Ukrainian strikes while Baltic services warn of a possible engineered NATO probe; EU states are reviving the frozen-Russian-assets plan.

- WSJ’s report that CIA Director John Ratcliffe went to Moscow to warn Russia against testing NATO makes the odd Andrews–Riga–Moscow, intelligence-to-intelligence itinerary look less like diplomacy than a message that Washington believes it is seeing operational preparation rather than rhetoric. Moscow has spent months building precisely the ambiguity such a test would need—naming Latvian sites as alleged Ukrainian drone bases, declaring it need not publicly prove attribution, preparing legal claims over Russian speakers, and signalling it may use military force to protect shadow-fleet shipping—so a future strike could be sold as retaliation, policing or self-defence rather than an attack on NATO. The most plausible probe could therefore be not tanks into Narva but an incident whose authorship or legal status is deliberately hard to classify: a genuinely Ukrainian-origin drone used in a false flag, an armed confrontation around a sanctioned tanker, or sabotage wrapped around a small Russian use of force followed by an immediate pause. Ratcliffe’s warning may have been aimed at that pause: do not assume Washington will let Moscow turn uncertainty over wreckage, waters or proportionality into uncertainty over whether Article 5 applies.

- Asia closed mixed with KOSPI outperforming +1.5%. EU indices -0.9% to +0.1%. US futures 0.0% to +1.2%. Gold +0.1%, DXY +0.1%; Commodity: Brent -0.3%, WTI -0.3%; Crypto: BTC +1.8%, ETH +3.5%.

Asia

- Bank of Korea (BOK) raised Repo Rate by 25bps to 3.00% (as expected).

- Australia Q2 Private Capital Expenditure (Capex): -3.6% v +0.8%e.

- Australia July Household Spending M/M: 1.1% v 0.3%e; Y/Y: 7.0% v 5.7%e.

- China July Industrial Profits Y/Y: 11.2 % v 15.1% prior.

- BOJ Dep Gov Himino stated that was important to stabilize price trend around 2%; Believed BoJ should continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with developments in economic activity, prices, and financial conditions. Would not comment on market expectations on BoJ rate hike.

Global conflict/tensions

- CIA Director Ratcliffe trip to Moscow was said to be intended to deliver an ultimatum over recent Russian drone incursions into NATO territory.

Energy

- Iran and Oman reached an agreement regarding Strait of Hormuz revenue sharing. Stressed that Strait would not be reopened if US did not accept Iran’s conditions. Claimed that US was obstructing the negotiation process between Oman and Iran which caused it to be delayed.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.84% at 10,787.00, DAX +0.02% at 26,321.50, CAC-40 -0.93% at 8,384.09, IBEX-35 -0.61% at 19,944.24, FTSE MIB -0.50% at 52,621.00, SMI -1.03% at 14,393.30, S&P 500 Futures +0.51%].

Market focal points/key themes: European equities largely marked time near recent highs on Thursday, with the Stoxx 600 off a muted 0.1% and the DAX, CAC 40 and FTSE 100 all within a few tenths of flat as desks digested Nvidia’s outsized AI demand signal against softer industrial and consumer tones. The California chipmaker’s doubled revenue, beat-and-raise guidance and 70% FY28 growth call lit up the European semiconductor chain—AT&S and Technoprobe each jumped roughly 4.5%, STMicroelectronics and Infineon added 2.5–3.5%, while BESI and ASML trailed the basket at +2–2.5%—and also spilled into AI-infrastructure names such as Computacenter (+4.5%) and Prysmian (+3%). Away from the chip complex, Tessenderlo gapped 9% on its H1 print, Scandinavian Tobacco rose 5.5% on strong cash conversion, and Bilfinger, IBA and Fielmann posted solid gains on margin or guidance upgrades; on the downside Eiffage slid 3.5% after an operating-profit miss, Pernod Ricard fell 2% on weaker organic sales and lowered medium-term growth. Separately, German consumer sentiment improved to –26.6 heading into September, buoyed by stronger economic and income expectations that hint at a gradual recovery in private consumption, while Brent crude slipped 0.5% to $87.40 for a fourth straight decline amid reports of renewed U.S.–Iran diplomatic efforts via Qatar and Oman that eased near-term supply-disruption fears in the Strait of Hormuz. Overall, the session reflected a cautious holding pattern near one-week highs, with selective upside confined to the AI and chip supply chain rather than a broad risk-on move.

Equities

- Consumer discretionary: Pernod Ricard [RI.FR] –2.0% (open –1.5% → now –2.0%; [L━●━━━━H]; FY revenue €9.40bn vs €9.44bn expected; organic sales –3.9% vs –3.7%; 2027–29 sales growth now expected at the low end of 3–6% as U.S. sales fell 14% and China 19%), Delivery Hero [DHER.DE] +1.5% (Q2 revenue €4.02bn vs €3.84bn expected; H1 adj. EBITDA €427m vs €396m expected; FY GMV growth raised to 9–11% from 8–10%, revenue growth to 17–19% from 14–16%, FCF >€250m from >€200m; reaction capped by Uber deal dynamics).

- Consumer staples:

- Energy: TotalEnergies [TTE.FR] –1.5% ([L●━━━━━H]; oil-sector read-through as Brent falls >$1 for a fourth session on hopes Iran/Qatar diplomacy could ease Hormuz-related supply disruption).

- Healthcare: IBA / Ion Beam Applications [IBAB.BE] +3.5% ([L━━━━●━H]; H1 sales €323.7m, gross margin 33.7% vs 29.5%, adj. EBITDA €26.6m +63%, adj. EBIT +66%; FY guidance remains on track).

- Industrials: Computacenter [CCC.UK] ~+4.5%; Prysmian [PRY.IT] +3.0% (open +1.5% → now +3.0%; [L━━━━●━H]) (AI-infrastructure read-through from Nvidia’s stronger demand trajectory across deployed compute, networking/power and data-centre electrical capacity; Computacenter additionally upgraded to Buy by Peel Hunt), Tessenderlo [TESB.BE] +9.0% ([L━━━━●━H]; H1 results released this morning; strongest idiosyncratic Belgian gap).

- Technology: AT&S [ATS.AT] +4.5% (open ~+1.5% → now +4.5%; [L━━━━━●H]); Technoprobe [TPRO.IT] ~+4.5%; STMicroelectronics [STM.IT] +3.5% (open +2.5% → now +3.5%; [L━━━●━━H]); Infineon [IFX.DE] +2.5% (open +1.5% → now +2.5%; [L━━━━━●H]); Siltronic [WAF.DE] +2.5% ([L━━━━━●H]); BESI [BESI.NL] +2.5% (open +2.0% → now +2.5%; [L━━●━━━H]); ASML [ASML.NL] +2.0% (open +2.5% → now +2.0%; [L━●━━━━H]) (Nvidia/AI-semiconductor read-through after the much stronger FY28 compute-demand signal; strongest sensitivity is in substrates, probe cards/testing and advanced packaging—AT&S/Technoprobe are outperforming—while ASML is lagging the basket; Infineon has a direct Nvidia MGX power-management link), SAP [SAP.DE] +1.5% (likely U.S.-software sympathy after Salesforce/CrowdStrike/Okta beats; partly reverses yesterday’s UBS-driven selloff rather than reflecting fresh SAP-specific news).

Speakers

- Philippines Central Bank Policy Statement noted that to Aug hike was done to anchor inflationary expectations and would take further measures as needed. El Nino posed upside risk to inflation and was monitoring wage developments on inflation. Added that headline inflation had eased and seen close to 3.0% target in 2028 period.

- Growth fundamentals remain intact; expected to strengthen in H2.

- Thailand Central Bank (BOT) Gov Ratanakorn noted that the next rate move could go either way. Not committed to a long pause.

- Pakistan Foreign Ministry spokesperson stated that would remain engaged to resolve Middle East crisis.

Currencies

- USD was again locked within a tight range with focus turning to Friday’s speech by Fed Chair Warsh at Jackson Hole.

- Various Far East central banks continued their tightening cycle with South Korea and Philippines hiking by 25bps. The upcoming Sept period will be a hotbed for potential tightening by global central banks with meetings being ‘live’. Speeches at the Jackson Hole symposium to be highly watch for rate path outlook.

- EUR/USD at 1.1650 by mid-session.

- USD/JPY at 159.30.

- The 10-year German Bund yield last at 3.23%, France 10-year Oat at 4.08% and 10-year Gilt yield at 5.01%; 10-year Treasury yield: 4.65%; 10-year JGB: 2.87%.

Economic data

- (FI) Finland Aug Consumer Confidence: -3.0 v -5.3 prior; Business Confidence: 6 v 7 prior.

- (FI) Finland July House Price Index M/M: -0.3% v -0.7% prior; Y/Y: -3.4% v -4.0% prior.

- (DE) Germany Sept GfK Consumer Confidence: -26.6 v -29.5e.

- (SE) Sweden July Trade Balance (SEK): 1.2B v 2.5B prior.

- (SE) Sweden July Household Lending Y/Y: 3.3% v 3.2% prior.

- (NO) Norway Q2 Overall GDP Q/Q: 0.7% v 0.4% prior; GDP Mainland Q/Q: % v 0.4%e.

- (JP) Japan July Final Machine Tool Orders Y/Y: 50.4% v 50.4% prelim.

- (HU) Hungary Jun Average Gross Wages Y/Y: 7.0% v 8.8%e.

- (PH) Philippines Central Bank (BSP) raised the Overnight Borrowing Rate by 25bps to 5.00% (as expected).

- (FR) France July PPI M/M: +1.1% v -0.4% prior; Y/Y: 3.4% v 2.8% prior.

- (EU) Euro Zone July M3 Money Supply Y/Y: 3.4% v 3.5%e.

- (AT) Austria Aug Manufacturing PMI: 54.4 v 51.5 prior (5th month of expansion).

- (TW) Taiwan July Monitoring (Leading) Indicator: 41 v 41 prior.

- (IS) Iceland Aug CPI M/M: 0.2% v 0.4% prior; Y/Y: 5.6% v 5.3% prior.

Fixed income issuance

- (IN) India sold total INR240B vs. INR240B indicated in 3-month, 6-month and 12-month.

- (CZ) Czech Republic sold CZK5.0B in 12-month bills; Avg Yield: 3.763%; bid-to-cover: 2.81x.

- (IT) Italy Debt Agency (Tesoro) sold total €4.5B vs. €4.5B indicated in 6-month Bills (2 tranches).

Looking ahead

- (BR) Brazil July Central Govt Budget Balance (BRL): +10.6Be v -48.2B prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa July PPI M/M: -0.9%e v -0.1% prior; Y/Y: 6.0%e v 7.5% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v -6.2% prior.

- 06:00 (FI) Finland to sell 2032 and 2040 Bonds via Ori auction.

- 07:30 (BR) Brazil July Current Account Balance: -$6.8Be v -$2.3B prior; Foreign Direct Investment (BRL): $8.0Be v $9.1B prior.

- 08:00 (PL) Poland Central Bank (NBP) July Minutes.

- 08:00 (BR) Brazil July National Unemployment Rate: 5.3%e v 5.4% prior.

- 08:00 (MX) Mexico July Unemployment Rate: 3.0%e v 2.9% prior.

- 08:00 (MX) Mexico July Trade Balance: $3.0Be v $4.1B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) July Advance Goods Trade Balance: -$100.5Be v -$101.4B prior (revised from -$100.5B); Exports M/M: -1.0%e v -1.8% prior; Imports M/M: -0.3%e v -2.4% prior.

- 08:30 (US) July Preliminary Wholesale Inventories M/M: 0.2%e v 0.2% prior; Retail Inventories M/M: +0.2%e v -0.2% prior (revised from 0.0%).

- 08:30 (US) Initial Jobless Claims: 208Ke v 206K prior; Continuing Claims: 1.79Me v 1.799M prior.

- 08:30 (CA) Canada Q2 Current Account Balance: +$3.9Be v -$7.2B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 21st: No est v $755.6B prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Aug Kansas City Fed Manufacturing Activity: 10e v 9 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 18:00 (NZ) New Zealand Aug Consumer Confidence Index: No est v 99.3 prior.

- 18:45 (NZ) New Zealand July Filled Jobs M/M: No est v 0.1% prior.

- 19:01 (UK) Aug Lloyds Business Barometer: No est v 49 prior.

- 19:01 (IE) Ireland Aug Consumer Confidence: No est v 61.6 prior.

- 19:30 (JP) Japan Aug Tokyo CPI Y/Y: 1.9% v 1.8% prior (revised from 2.0%); CPI (Ex-Fresh Food) Y/Y: 1.8%e v 1.7% prior (revised from 1.9%); CPI (Ex-Fresh Food, Energy) Y/Y: 2.0%e v 1.8% prior (revised from 2.0%).

- 19:30 (JP) Japan July Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 2.19x v 1.18x prior.

- 21:00 (PH) Philippines July Trade Balance: -$5.2Be v -$4.9B prior; Exports Y/Y: 17.7%e v 24.1% prior; Imports Y/Y: 16.2%e v 19.6% prior.

- 23:30 (JP) Japan to sell 3-Month Bills; Avg Yield: % v 1.0816% prior; bid-to-cover: x v 3.87x prior (Aug 20th 2026).

- 23:35 (JP) Japan to sell 2-year JGB Bonds.