After a decidedly uneventful session, with Europe's Stoxx Europe 600 down 0.01% and the S&P 500 slipping 0.02%, attention shifted squarely to Nvidia's quarterly results and outlook. The company did what it needed to do, beating expectations both on reported earnings and forward guidance. Chief executive Jensen Huang once again struck his familiar reassuring tone: everything is going just fine. Alongside chief financial officer Colette Kress, he sought to dismiss concerns about the increasingly circular nature of the ecosystem taking shape, in which some companies are simultaneously suppliers, financiers and shareholders in customers or intermediaries. The argument rests more on confidence than hard proof, but it still carries weight given how consistently Nvidia has positioned itself ahead of the curve over the past 15 years.

Ultimately, investors focused above all on the prospect of exceptional growth this year and next. They were willing to look past the pressure on margins from rising supply-chain costs. Salesforce and CrowdStrike also posted strong results, accompanied by the now-familiar barrage of references to AI. Both shares rose more than 10% in after-hours trading, comfortably outpacing Nvidia's 4.7% gain. For now, investors have once again been given a broad green light to keep backing the AI investment theme.

The main obstacle remains inflation, and it is not going away. Admittedly, that has been a recurring concern ever since Covid. Before then, markets had largely stopped worrying about it after years of ultra-loose central-bank policy, with interest rates held near zero in the wake of the subprime crisis. Inflation is well below the peaks seen two or three years ago, but a growing number of indicators suggest it will not return to comfortable levels any time soon. The pressure is visible almost everywhere: in Nvidia's margin outlook, in record wheat prices amid the war in Ukraine, in US PCE inflation holding at 3.3%, and in oil prices repeatedly struggling to move sustainably lower.

Persistently high inflation feeds two of the financial world's biggest fears, alongside a ban on sleeveless padded vests and the far left taking power. The first is higher policy rates, which make capital more expensive and less plentiful. The second is a loss of control over public finances, in the United States for example, which would push risk premia sharply higher. US Treasury Secretary Scott Bessent has managed in recent days to steady the US Treasury market by announcing several measures and signalling that he still has plenty of tools available, unlike the US military. The strategy has worked, but the cost of refinancing US debt remains high.

A rate increase in September in response to inflation would hardly help. Even so, talk of a move next month appears to be coming more from market chatter than from actual trader positioning. The prevailing view is still that the "Bessent Put", the belief that Bessent will deploy unconventional measures if key indicators move too far in the wrong direction, together with carefully judged rhetoric, will be enough to avoid a change in policy rates. In monetary policy, words can sometimes do the job of action. The implied probability of rates being left unchanged even rose from 60% to 64% yesterday despite an unfavourable PCE inflation reading. That figure could shift again after Federal Reserve Chairman Kevin Warsh speaks tomorrow at the Jackson Hole Symposium.

Today, a handful of earnings releases will keep investors occupied, including Pernod Ricard and Marvell, alongside the latest weekly US jobless claims. Markets are likely to move between the after-effects of Nvidia's results and anticipation ahead of Warsh's speech tomorrow.

The MSCI AC Asia Pacific index is up 0.3% this morning. South Korea's KOSPI is showing only a modest response to the AI chip giant's results, rising 1%. Japan's Nikkei 225 is down 0.3%, while Hong Kong's Hang Seng is 0.4% lower. Australia is the weakest major market, falling 1.1% as mining shares come under pressure. European markets are expected to open slightly higher.

Today's economic highlights:

Today's agenda includes: the RBA Bulletin in Australia and the BoJ Himino Speech in Japan; the GfK Consumer Confidence in Germany; Unemployment Benefit Claims in France; the ECB Monetary Policy Meeting Accounts for the Euro Area; in the United States, Initial Jobless Claims, Goods Trade Balance, Wholesale Inventories, and Retail Inventories Ex Autos; the Current Account in Canada. See the full calendar here.

  • GBP / USD: US$1.359
  • Gold: US$4,604.6
  • Crude Oil (BRENT): US$87.34
  • United States 10 years: 4.66%
  • BITCOIN: US$78,789.4

In corporate news:

From Europe

  • BP Plc blames a trade union for delays in pay negotiations at a refinery in the US.
  • HSBC planning to overhaul Singapore operations, according to Bloomberg.
  • Prudential Plc reports a 26 per cent fall in H1 profit.
  • The German Finance Minister is meeting the CEO of UniCredit for direct talks on the acquisition of Commerzbank.
  • Boliden is set to take a majority stake in Nexa Resources via a $1.3 billion share deal.
  • Alcon issues senior bonds worth €500 million.
  • Prudential is to sell a 2 per cent stake in ICICI Prudential Asset Management.
  • Aegon files Form F-4 relating to its planned transfer of its registered office to the US.
  • Belimo has opened a new production and logistics facility in Switzerland.
  • Moody’s has upgraded Evonik’s credit rating to Baa1.
  • Moody’s has affirmed Wienerberger’s Baa3 credit rating but downgraded the outlook to negative.
  • KNDS is considering relaunching its initial public offering in September.
  • Today’s key earnings releases: Prudential, Ageas, Delivery Hero, Accelleron Industries, Asseco Poland.

From North America

  • Shares rising in after-hours trading following their results: Salesforce (+13%), CrowdStrike (+10.5%), Nvidia (+4.7%).
  • Nvidia is also reportedly in talks to acquire Hugging Face, according to several sources.
  • Meta Platforms is set to pay up to $18 billion as part of settlement agreements to resolve complaints filed by several US states regarding social media platforms.
  • Apple has set 9 September as the date for its next launch event, where the new iPhone and potentially its first foldable smartphone will be unveiled.
  • Barret Zoph, co-founder of Thinking Machines Lab, is joining Google.
  • Lam Research is starting construction of a new laboratory in Oregon for the development of advanced AI chips.
  • Boeing is advertising temporary job vacancies amid the labour dispute with its engineers.
  • KKR is paying $250 million to settle antitrust lawsuits in the US relating to breaches of merger notification requirements.
  • Today’s key earnings releases: Marvell Technology, Autodesk, Workday.

From Asia and elsewhere

See more news from UK listed companies here

Analyst Recommendations:

  • Bunzl Plc: Bernstein maintains its outperform recommendation with a price target raised from 2750 to GBX 3100.
  • Next Plc: Bernstein maintains its outperform recommendation with a price target raised from 16000 to GBX 17000.
  • Greatland Gold: Argonaut Securities Pty Limited maintains its buy recommendation with a price target raised from 7.50 to GBP 8.60.
  • Diageo Plc: UBS maintains its neutral recommendation with a price target raised from 1600 to GBX 1850.
  • Croda International Plc: Morgan Stanley initiates an overweight recommendation with a price target raised from 3500 to GBX 3850.
  • Hochschild Mining Plc: Jefferies maintains its buy recommendation with a price target raised from 625 to GBX 700.
  • Oxford Nanopore Technologies Plc: JP Morgan maintains its overweight recommendation with a price target raised from 1.90 to GBP 2.20.
  • Fevertree Drinks Plc: Goldman Sachs maintains a neutral recommendation with a price target reduced from 885 to GBX 875.
  • Barclays Plc: Zacks maintains a neutral recommendation with a price target reduced from 30 to USD 28.75.