Nvidia logo and microchip image
Nvidia jumps 9.1% in after-hours trade / Image source: Adobe

Blue-chip equities in Europe traded higher on Thursday morning, as investors breathed a sigh of relief after Nvidia scored an earnings beat.

The hotly-anticipated figures from a company at the heart of an artificial intelligence revolution could have threatened jitters in markets if they fell short of lofty expectations.

The FTSE 100 index opened up 8.89 points, 0.1%, at 7,671.40. The FTSE 250 was up 65.15 points, 0.3%, at 19,184.12, and the AIM All-Share was down 0.85 of a point, 0.1%, at 749.17.

The Cboe UK 100 was up 0.1% at 767.93, the Cboe UK 250 was up 0.5% at 16,601.55, and the Cboe Small Companies was up 0.3% at 14,506.05.

In European equities, the CAC 40 in Paris was up 0.9%, while the DAX 40 in Frankfurt jumped 1.5%.

Sterling was quoted at $1.2696 early Thursday, rising from $1.2644 at the London equities close on Wednesday. The euro traded at $1.0866, higher than $1.0812. Against the yen, the dollar was quoted at JP¥150.21, a touch below JP¥150.25.

The dollar weakened despite minutes from the latest Federal Reserve meeting suggesting it is in no rush to cut rates.

Minutes from January’s Federal Open Market Committee meeting released on Wednesday evening showed that officials remained ‘highly attentive’ to inflation risks amid fears the current progress could stall.

‘Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%,’ the minutes stated.

At January’s meeting, the FOMC unanimously voted to leave interest rates unchanged for the fourth meeting in a row. The key rate is targeted in a range between 5.25% and 5.50%, the highest in nearly 23 years.

Oxford Economics analyst Ryan Sweet commented: ‘You must tip your hat to the Federal Reserve as it has tightened monetary policy sufficiently to put downward pressure on inflation but not put the economy at serious risk of a recession. However, its work is not done, and the odds of a policy error appear higher.

‘The minutes noted that policymakers were more concerned about the risks of cutting interest rates too soon rather than waiting too long. This seems odd as there is significant disinflation in the pipeline. If the central bank waits for clear signs that the labour market, or the broader economy, is deteriorating, it will be behind the curve. This could make a soft landing bumpy.’

There is a slew of flash composite purchasing managers’ index readings to come on Thursday, including the UK at 0930 GMT.

Analysts at Lloyds Banking Group commented: ‘Today’s UK flash PMIs for February are expected to signal expansion (above 50 reading) for a fourth month running, with the composite index accelerating from late 2023. That is mostly due to a pickup in the services index. We expect that to have continued in February and forecast another rise in the services measure to 55.5 from 54.3, which would be its highest since last April. In contrast, the manufacturing index remains mired in sub-50 territory and consistent with contracting activity. We expect that to have remained the case in February, but in a sign that the sector may be stabilising, we forecast the headline measure rising to its highest level since last April.’

In the US on Wednesday, Wall Street ended slightly higher, with the Dow Jones Industrial Average and the S&P 500 rising 0.1% and the Nasdaq Composite up 0.3%.

Nvidia jumped 9.1% in after-hours trade, after declaring artificial intelligence has ‘hit the tipping point’ as it celebrated surges in both quarterly and annual revenue and profit.

The Santa Clara, California-based computer chip manufacturer said revenue for the fourth quarter to January 28 rose 22% quarter-on-quarter to a ‘record’ $22.10 billion, more than triple $6.05 billion in the final quarter of the previous year. Net income rocketed to $12.23 billion from $1.41 billion.

In Asia on Thursday, the Nikkei 225 index in Tokyo was up 2.2%, boosted by the Nvidia-fuelled optimism. In China, the Shanghai Composite ended up 1.3%, while the Hang Seng index in Hong Kong surged 1.5%. The S&P/ASX 200 in Sydney closed slightly higher.

Gold was quoted at $2,031.84 an ounce early Thursday, higher than $2,024.88 on Wednesday. Brent oil was trading at $83.24 a barrel, higher than $82.84.

In London, Rolls-Royce shares rose 9.3%, among the best large-cap performers. The jet engine maker hailed a ‘step-change’ in performance last year, though it did not return to the dividend list just yet.

Rolls-Royce reported statutory revenue from continuing operations of £16.49 billion, up 22% from £13.52 billion in 2022.

It swung to a pretax profit of £2.43 billion from a loss of £1.50 billion. On an underlying basis, pretax profit jumped to £1.26 billion from £206 million.

It hailed ‘record’ free cash flow from continuing operations of £1.29 billion, markedly above the £505 million generated in 2022. It predicts free cash flow between £1.7 billion and £1.9 billion for 2024.

Insurer Beazley shot up 8.9% after upping guidance. It now expects an undiscounted combined ratio in the ‘mid-70s’ for 2023, an improvement on the previous ‘low-80s’ guidance. A combined ratio below 100% means a profit on underwriting, so the lower the better.

In addition, it said shareholders can expect an ‘additional capital return in respect of 2023’ of $300 million. It announces annual results on March 7.

Hargreaves Lansdown fell 4.7%. The fund supermarket reported an increase in assets under administration, though net new business growth ebbed in the final six months of 2023.

In the six months to December 31, the first half of the firm’s financial year, net new business totalled £1.0 billion, down 38% from the £1.6 billion achieved a year prior.

HL explained: ‘Our gross inflows to the platform were up year on year, however, our outflows were up too, meaning that overall, our net new business came in at £1.0 billion.’

It said outflows were the highest in ‘products that our clients use for more transient saving and investing’.

Assets under administration amounted to £142.2 billion, a rise of 12% from £127.1 billion a year earlier and up 6% since June.

Revenue for the half-year amounted to £368.2 million, a rise of 5.2% on-year from £350.0 million. Pretax profit, however, fell 7.6% to £182.5 million from £197.6 million.

HL lifted its interim dividend by 3.9% to 13.2p from 12.7p.

‘We are re-iterating our guidance of 4% growth in our ordinary dividend for the full year,’ it said. ‘

Primorus jumped 32% after the investment firm said it received cash proceeds of $6.1 million after investee Payapps was acquired by New York-listed Autodesk.

‘The receipt of these funds provides a substantial increase in the cash position of the company. The board of the company are considering various options to return value to shareholders whilst also maintaining enough capital in the company to continue implementing its investing strategy. A further announcement will be made in due course,’ it added.

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Issue Date: 22 Feb 2024