Rate hike pressure eases and AI momentum returns
The July jobs report in the US showed that fewer jobs were created than expected. This eased concerns that the Federal Reserve (Fed) would need to raise interest rates and helped push equities to all-time highs.
Later in the week, inflation data came in below expectations, driving the equity market to another record high. While geopolitical tensions remained elevated, investors largely focused on the flurry of news confirming sustained demand for AI-related hardware.
Nvidia manufacturing partners TSMC and Hon Hai, also known as Foxconn, reported robust sales growth in July of 45% and 54%, respectively. Neocloud providers CoreWeave and Nebius also surged after strong results that exceeded expectations. Nvidia partnered with investment firms Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs and KKR to source USD 500 billion in financing for AI infrastructure. This allows Nvidia customers to access dedicated pools of capital at attractive rates.
Moreover, Anthropic signed several deals to secure data centre capacity, while Intel raised USD 20 billion in an upsized share sale, a third more than initially targeted. Together, these reports suggest that the AI story remains in full swing.
Elsewhere, industrial and renewable energy shares benefited from improved outlooks. Vestas Wind Systems raised profit guidance and announced a share buyback following stronger turbine orders. This highlights a more constructive operating environment in parts of the clean energy sector.
Looking ahead, investors are likely to remain focused on additional corporate earnings releases from other later-reporting firms. In particular, Nvidia’s results, due in two weeks, should provide further insight into the developments of the AI ecosystem.