NAGA Weekly Recap | August 21 – August 25 — 2023

It's been a whirlwind week in the economic realm: Nvidia showcased the potential of AI in the tech sector, oil prices wavered due to global manufacturing data, and all eyes are on the Jackson Hole symposium for insights from Federal Reserve Chair Jerome Powell.

Dive into our weekly recap for a comprehensive overview!

Futures tied to the tech-heavy Nasdaq lead gains

Nvidia's strong performance, backed by the growing importance of AI in the tech sector, drove its stock up after a successful quarter and optimistic future guidance. This positivity influenced the Nasdaq futures, pushing them up by approximately 0.9%, marking a one-month high at over $52. In contrast, Dow futures dropped by about 0.2%, while the S&P 500 futures increased slightly less than 0.9%.

Despite the current uplift, NASDAQ is yet to reach its December 2022 peak of $69. It remains to be seen if Nvidia's upward momentum will be sustained in the volatile stock market this August.

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Nvidia is dominating the AI chip race

Nvidia remains a leading player in the AI industry.

Shares of the tech beast are up 8% after another monster quarter and outlook on the back of strong demand for new AI chips.

Net sales surged 101% from the prior year to $13.51 billion. Earnings per share improved a staggering 429% year on year. Nvidia's October quarter sales outlook of $16 billion was significantly above consensus forecasts for $12.6 billion.

"The world has something along the lines of about a trillion dollars worth of data centers installed in the cloud and enterprise and otherwise. And that trillion dollars of data centers is in the is in the process of transitioning into accelerated computing and generative AI", Nvidia CEO Jensen Huang said on the earnings call.

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Oil prices fall on weak economic data

Oil prices declined, influenced by poor manufacturing data from major global economies despite a significant drop in US crude stocks. As markets watched the Federal Reserve Chair Jerome Powell's speech in Jackson Hole, Brent Crude dropped to $82.94 a barrel, while US West Texas Intermediate crude decreased to $78.58 a barrel.

Recent PMI surveys highlighted weakened economic health worldwide, causing concerns over demand. Notably, Japan witnessed its factory activity contract for the third consecutive month in August, while the Eurozone also reported a sharper-than-expected decline in business activity.

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One of the most volatile weeks for the US Dollar

The US Dollar experienced significant volatility ahead of the Jackson Hole Symposium, featuring key discussions by central bankers on the elevated rates and current inflation targets. While the US Dollar Index almost reached 104 following comments by former US Fed member James Bullard about inflationary pressures, it retracted after weak US PMI numbers, ending Wednesday in a downturn.

However, traders anticipate significant movements in the DXY, targeting 104.00 on the upside. The symposium's discussions and subsequent data releases, such as the Durable Goods data, are expected to influence the dollar's trajectory in the coming days.

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This concludes our weekly recap. Have a great weekend and see you next week! 👋