Market snapshot: tech shines again, even in the UK

The highly anticipated run-in to NVIDIA Corp (NASDAQ:NVDA)’s results reached fever pitch, even eclipsing escalating geopolitical concerns after comments from Russia.

The initial reaction to comments suggesting that the threshold for the use of nuclear weapons had lowered understandably sideswiped markets, with a move to haven assets such as gold and Treasury bonds, lowering yields as prices rose. More conciliatory remarks from a Russian official later soothed nerves, although the tension over recent days has risen, let alone any concerns over how the new administration in the US might react to the rhetoric.

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Investor attention then turned to Nvidia, whose shares rose by almost 5% ahead of its latest earnings report after the bell today. The company’s outsize influence on the technology focused indices helped both the S&P500 and Nasdaq higher, with the options market suggesting that a 9% share price swing in either direction is still in play following the results.

Nvidia has become the poster child of the new AI revolution and a market darling in turn, with investors still scrambling to price a stock whose earnings have continued to confound. Expectations are ratcheting higher with each release, which is unsurprising given a lofty valuation which has seen the share price rise by 850% over the last two years and by 205% this year alone.

Elsewhere, Walmart Inc (NYSE:WMT) numbers were well received and the shares added 3% accordingly to a record closing high. The group raised its sales and profit guidance for the third consecutive time, while investors also took comfort from the fact that its customers were purchasing items in higher margin categories, suggesting that the consumer remains in rude health, an important signal ahead of the imminent festive season.

The Dow Jones faltered slightly during the session but remains ahead by 14.8% so far this year. Meanwhile, the Nasdaq in particular saw the benefit of Nvidia strength, with the index now up by 26.5% this year, with the benchmark S&P500 having added 24%.

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Asian markets were mixed to lower, unable to shake off the heightened geopolitical concerns while also grappling with the implications of what a new administration in the US might mean for aggressive tariffs.

Meanwhile, Japan registered a trade deficit in October for the fourth consecutive month, even though a weaker yen helped exports to rise by 3.1%, rebounding from a 1.7% decline in September.

In China, markets were marginally lower as the central bank announced that benchmark lending rates would remain unchanged after last month’s cut, further deflating investor hopes that the required stimulus to reinvigorate the economy were beginning to gather momentum.

The initial focus in the UK was on inflation, which rose to 2.3% in October from 1.7% in September. While the reading was largely expected to have risen against the backdrop of a higher energy price cap, it nonetheless casts further doubt on the Bank of England’s next move on interest rates. The recent likely inflationary impacts arising from both the Budget and new potential tariffs from the US could result in higher for longer UK rates, as a new assault on energy demand given the current temperatures and sticky services inflation remain on the cards.

As such, a more cautionary monetary policy approach has been factored in by markets, one result of which has been that the rise of the FTSE250 in the year to date has been limited to just 4%, despite the earlier tailwinds of increased Merger and Acquisition activity.

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The premier index was largely unmoved at the open, with one notable exception. While the FTSE100 is hardly littered with tech stocks which have propelled markets elsewhere, accounting software group Sage Group (The) (LSE:SGE) is a rare and often unheralded exception. Its shares rose by around 17% following its annual results, where the group announced a 50% hike in pre-tax profit, a share buyback programme of £400 million and an upbeat outlook including organic revenue growth of 9% or more.

Less positively, pressure remained on the property sector, with declines of around 2% for Vistry Group (LSE:VTY), which has been now fallen by around 30% over the last month, and for British Land Co (LSE:BLND) after half-year numbers revealed a return to pre-tax profit, but shy of expectations. These opposing forces left the FTSE100 slightly ahead on balance, bringing its year to date gain to 4.9%, with the index seemingly unable to break out of its limited range over recent months.