Daily Brief - 22 Feb 2024

Nvidia declares AI ‘tipping point’ as quarterly revenues jump 265%

Nvidia has once again stunned the world by exceeding financial forecasts, with its latest sales prediction hitting a whopping $24 billion, outshining the average analyst expectation. The company's success is riding high on the global AI wave, with its chips being in hot demand for powering the latest in chatbots and generative AI services. CEO Jensen Huang announced that we've reached an AI "tipping point", with their tech playing a central role. This news has not only boosted Nvidia's stock but has also positively impacted other tech giants betting big on AI. Amidst this AI frenzy, Nvidia is also navigating challenges, like competition and new export rules, but remains a key player in the tech arena.

Japan’s Nikkei 225 index eclipses record high after 34 years

After a long 34-year wait, Japan's Nikkei 225 index has finally broken past its all-time high, reaching a new record level since the bubble era of the late 1980s. The climb to over 39,000 points was fuelled by a significant rally in chip-related stocks, with a notable boost from Nvidia's strong earnings in the US. This milestone has sparked jubilation and a sense of achievement among Tokyo's traders and investors. The Nikkei's leap is also a result of the yen's fall, making Japanese exports more competitive, alongside a shift of investor interest away from China due to its economic slowdown and geopolitical concerns. Additionally, Japan's domestic investment has surged, thanks to a new savings scheme supported by the government. This historic breakthrough is seen as a symbolic victory over decades of economic challenges, bringing optimism to the Japanese stock market's future.

Fed Reserve officials were wary of cutting interest rates too quickly

The Federal Reserve's recent meeting highlighted a cautious stance on lowering interest rates too quickly, with most officials prioritizing the need to ensure inflation is steadily moving towards their 2% target. Despite acknowledging that interest rates might have reached their peak, the timing for any rate reductions remains uncertain, reflecting the Fed's careful approach in the face of persistent inflationary pressures. This cautious outlook is driven by recent economic data indicating a stronger-than-expected economic performance, including a surge in payrolls and a higher consumer price index. The Fed's deliberations suggest that while there may be discussions on slowing down the reduction of its asset portfolio, an immediate easing of policy through rate cuts or halting the asset runoff seems unlikely. As the Fed gears up for its next meeting, with updated economic projections and further insights from Chair Jerome Powell, the focus remains on achieving greater confidence in the inflation trajectory before making any moves to cut rates.