Nvidia weighs on Wall Street, ASX set to slide
Staff reporters
Updated ,first published
The Australian share market is poised for its third monthly gain, closing higher on Friday after a volatile earnings reporting season that saw investors cut prices for supermarket giant Coles after it fell short of expectations.
Softer-than-expected sales growth in the face of the resurgence of arch-rival Woolworths caused Coles’ shares to fall 7.4 per cent. The retailer’s decline was offset by a sharp jump in payments giant Block, which gained 28 percent after Jack Dorsey announced it would cut more than 4,000 jobs, nearly half its workforce.
The S&P/ASX 200 index rose 23.3 points, or 0.3 percent, to close at 9,198.6, marking the stock market’s third consecutive monthly gain. Seven of 11 industrial sectors traded higher, driven by utilities rising 1.4 percent.
Cuts at Block will reduce the global workforce from more than 10,000 employees to just under 6,000, making it one of the largest AI-focused job culls to date. Block, which acquired Melbourne-based buy now, pay later platform Afterpay for about $39 billion in 2022, has a significant presence in Australia, but the exact number of local employees affected remains unclear.
Coles’ group sales rose 2.5 percent in the half-year to $23.6 billion. Net profit fell 11.3 per cent to $511 million after the retailer set aside $165 million to cover fines arising from the underpayment scandal that has embroiled both Coles and Woolworths. Supermarket sales rose 6 percent but liquor sales were weaker.
Furniture and electronics retailer Harvey Norman lost 9 percent after weak sales in Australia overshadowed a better management performance. It also narrowly missed expectations for an interim dividend of 14.5 cents per share. Sales revenues rose 6.9 percent to $5.16 billion, and after-tax profits rose 15.2 percent in the first half. It was stated that margins of franchise-operated stores also increased.
Airline Virgin Australia has reported an increase in half-year profit, driven by strong revenue growth and demand in the leisure sector. Pretax earnings rose 11.7 percent to $490 million, but the news failed to lift its shares, which closed flat.
The banking sector remained relatively stable, apart from market giant Commonwealth Bank, which closed down 1.5 per cent following a report. Australian Financial Review He said he alerted police and the corporate regulator about the suspected fake loans. Both Westpac and NAB closed marginally, while ANZ edged slightly higher.
The majority of mining stocks posted gains. Fortescue rose 1.4 percent and BHP rose 1.1 percent. Gold miner Northern Star rose 2.2 percent, Evolution Mining rose 1.1 percent, while rare earth miner Iluka Resources rose 9 percent. Rio Tinto was the outlier, down 0.8 percent.
Energy stocks remained stable as oil prices fell following the talks between the USA and Iran regarding their nuclear program. Woodside rose 1.3 percent, Yancoal rose 3.9 percent, Ampol rose 1.5 percent and Santos remained stable.
The Australian dollar was trading around 71.27¢ in the afternoon.
On Wall Street, Thursday was the worst day for Nvidia shares since last spring, dragging the U.S. market lower while most stocks rose.
The S&P 500 index fell 0.5 percent after experiencing sharp fluctuations at the beginning of the week due to the hopes and concerns created by the artificial intelligence revolution. The Dow Jones gained 17 points, or less than 0.1 percent, and the Nasdaq composite fell 1.2 percent.
Nvidia, whose chips are helping power the AI boom, reported another quarter of profit growth that beat analysts’ expectations. At the same time, revenue estimates for the current quarter once again exceeded Wall Street’s estimates.
But such explosive performances have become so typical of Nvidia that they are losing their appeal. Its shares lost 5.5 percent, its worst loss since April.
“Our customers are racing to invest in AI computing, the factories and future growth powering the AI industrial revolution,” said Nvidia CEO Jensen Huang.
Since Nvidia’s value is the largest stock in the US market, it has more influence on the S&P 500 than any other. It alone accounted for more than four-fifths of the S&P 500’s loss.
Despite Nvidia’s troubles, seven stocks rose for every three stocks that fell in the S&P 500. Among them was Salesforce, which rose 4 percent after reporting stronger profits than analysts expected in the latest quarter.
World Economic Forum Chief Executive Børge Brende announced overnight that he is resigning from his post following revelations that he had ties to convicted pedophile Jeffrey Epstein.
A recent batch of documents in the Epstein files showed that Brende arranged to meet the financier for dinner at his New York home in 2018 and 2019. The second of these meetings was planned just weeks before Epstein was arrested in the United States on sex trafficking charges. He died in prison in August of that year.
WEF announced earlier this month that it had launched an investigation into Brende and her relationships with Epstein. The former Norwegian foreign minister said at the time that he was “completely unaware of Epstein’s past and criminal activities” but acknowledged he should have been more detailed.
AP, Bloomberg
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