Wed 25 Feb: After the Bell🔒
Risk-on sentiment ahead of Nvidia's strong earnings after the close...
Good evening,
Markets extended their rebound on Wednesday, with AI-linked and software stocks building on Tuesday’s recovery from Monday’s selloff as risk appetite returned across equities and crypto. The Nasdaq rose 1.2%, led by IT and Financials, while Bitcoin jumped around 7%. All eyes were on Nvidia earnings, arguably the most important release for global markets amid ongoing doubts about AI’s long-term potential, and the results delivered: Q4 revenues of $68bn beat expectations, management described computing demand as “growing exponentially,” gross margins reached 75%, and the stock closed up 1.9% before gaining a further ~3% after hours. Guidance was equally strong, with next-quarter sales seen at roughly $78bn (excluding China data-centre demand), comfortably ahead of consensus.
Adding to the risk-on tone, Netflix jumped 6% after Warner Bros. Discovery said it was considering a renewed bid by Paramount Skydance. Elsewhere, benchmark bond yields were largely unchanged, with the US 10-year holding around 4.05% after a strong February rally, while the $ edged slightly weaker, mainly against £ and the Aussie dollar. Commodity markets saw no notable moves.
Earnings: → European earnings broadly beat or met expectations, lifting sentiment and stocks across the region: HSBC delivered above forecast results and raised its targets, helping its shares jump 8%, Iberdrola (+1.5%) posted a ~10% rise in net profit driven by its networks business, and E.ON (+3.5%) reported results in line with forecasts while boosting long-term investment plans, underpinning generally positive market reactions.
Central Banks: → Musalem, president of the St. Louis Fed, and Barkin, president of the Richmond Fed, gave speeches today that leaned cautious to neutral on near-term interest rate moves, emphasising data and inflation progress rather than signalling imminent cuts or hikes, with no notable market impact.
Corporate Deals: → French utility Engie (mcap €67bn) agreed to acquire UK Power Networks, a privately owned electricity distribution network (controlled by Cheung Kong Infrastructure, Power Assets and the Li Ka Shing Foundation) for an equity value of about £10.5bn ($14.2bn), expanding its footprint in regulated electricity distribution in the UK. Engie reports earnings tomorrow.
→ British drugmaker GSK (mcap £89bn) agreed to acquire 35Pharma, a privately held Canadian clinical-stage biotech, for $950m in cash, strengthening its respiratory and cardiopulmonary pipeline as CEO Luke Miels steps up bolt-on M&A to offset looming patent expiries.
