Markets Await Nvidia Results and Inflation Data

The stock markets showed little movement as investors held back their decisions ahead of the forthcoming Nvidia results and US inflation data. US stock futures showed minimal change. The European Stoxx 600 Index rose by 0.2%, led by gains in the mining sector. Trading activity was low, with volume on most European indices reaching about half of the average level of the past 30 days. Government bonds and the dollar also remained stable. Expectations are high ahead of Nvidia's results, which will be released on Wednesday, particularly following an earnings season that was disappointing for other "Magnificent Seven" megacaps. Investors will also be closely watching later data on US economic growth and inflation. In Asia, further evidence of a slowdown in China dampened investor sentiment. "The markets are likely to trade in a narrow range until the US GDP data and Nvidia's quarterly results are released," said Andreas Lipkow, a strategist at Comdirect Bank AG. Among individual stocks, Associated British Foods declined as Deutsche Bank downgraded its rating from hold to sell. Daimler Truck fell after Goldman Sachs issued a neutral rating. Bunzl shares, however, rallied strongly after the distribution company raised its full-year earnings forecast. Meanwhile, Mary Daly, President of the Federal Reserve Bank of San Francisco, said it was appropriate to lower interest rates, while her Richmond colleague Thomas Barkin continued to see upside risks for inflation but also supported a rate cut. Economists expect the price index for personal consumption expenditures excluding food and energy – the Fed’s preferred measure of core inflation – to rise again by 0.2% in July for the second consecutive month. This would reduce the annualized three-month rate of so-called core inflation to 2.1%, just above the central bank’s target of 2%. "Powell has paved the way for a rate cut in September, which supports our thesis of continued broad market rotation," said Ohsung Kwon at Bank of America. "But do not underestimate the Nvidia results, a consistent driver of S&P yields and still a risk for the markets if they disappoint.