Week Ahead: Nvidia and inflation data to move markets

It’s a big week to round off August with important inflation data from around the globe, as well as the results of Nvidia, the tech megacap chipmaker. Markets will also be digesting Fed Chair Powell’s speech at Jackson Hole last Friday. He looks to have now finally pivoted 100% towards rate cuts with the size of the move in September, potentially squarely down to the non-farm payrolls report on the first Friday of next month.

“The time has come for policy to adjust”, Powell told other central bankers and policymakers, with seemingly any rise in the unemployment rate and a low headline add triggering a bigger 50bps rate reduction. This Friday sees the Fed’s favoured inflation gauge, which is also likely to rubber-stamp the direction of travel in rates. Money markets price in around 100bps of policy easing for this year, with roughly 33bps for the 18 September FOMC meeting.

The dollar fell for a fifth straight week and is near to December low at 100.61. The 200-week SMA sits just below here at 100.30. Gold again looks good for more upside if it holds above $2500 though the weekly doji candle warns of some indecision. Stocks are eyeing up all-time highs after three strong weeks of gains. Whether they make fresh peaks near-term is likely to be down to Wednesday’s Nvidia’s earnings report that it could serve as a “reality check” for the broader market. Anything less than another beat and raise may prove to be a disappointment which could bruise the bullish momentum in risk assets.

In Brief: major data releases of the week

Monday, 26 August 2024

– IFO German Business Surveys: Germany’s most prominent leading indicator is expected to fall for a four straight month. That trend is due to a weaker global outlook, policy uncertainty in France and Germany and the upcoming unclear US election.

Wednesday, 28 August 2024

– Australia CPI: The monthly figure is seen flat. This is due to declining gasoline and food prices, plus some seasonal factors. This should help the annual print fall to 3.5%, which is still higher than the start of 2024. 

– Nvidia Earnings: With the stock up over 150% this year alone, the pressure is on the AI darling to deliver. The chipmaker has beaten estimates six quarters in a row and has only missed twice in the last five years.

Friday, 30 August 2024

– Tokyo CPI: Inflation is forecast to drop to 1.9% in August from the prior 2.2%. This is mainly due to the government’s temporary energy subsidy programme. This data acts as a forerunner to the national figures.

– Eurozone Inflation: Consensus sees headline HICP easing to 2.3% y/y in August from 2.6% in July and the core down one-tenth to 2.8% y/y. Wage growth is moderating too, with another ECB rate cut in September virtually fully priced.

– US Core PCE: The core PCE deflator is predicted to print at 0.2% m/m. Components of some of the PPI data that feed into the PCE were softer. Inflation is at target on an ex-shelter basis.