The Overnight Report: Nvidia, Make Or Break?

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US markets fell post a positive start as jitters around the AI trade and Nvidia's earnings on Wednesday (US time) continued to roll the high flyers, ex Google (thanks to Warren Buffett).

The ASX200 finished broadly flat yesterday. Futures are pointing to a weak start ahead of the RBA's November meeting minutes at 11.30 (AEST).

Good Morning,

The ASX200 closed flat on Monday, up a slight 2pts at 8,636 with technology and energy positive while health care and financials lagged, pulled down by CommBank ((CBA)) and Macquarie Group ((MQG)).

Elders’ ((ELD)) FY25 release was well-received.

The RBA is releasing the November meeting minutes at 11.30 AEST.

What happened overnight, NAB Markets Today Research

After initially trading in and out of positive territory, late in the overnight session US equities made a decisive turn lower with the move led by Tech and Financial stocks.

US treasury yields range traded with the curve showing a mild flattening bias while the USD benefited from risk aversion in the air with AUD the notable underperformer. The US Empire Manufacturing survey beat expectations; Fed Jefferson warned a December cut is “not a forgone conclusion” while tensions between China and Japan escalated amid threat of economic retaliation.

Ahead of Nvidia reporting after the close of US markets on Wednesday and non-farm payrolls (Sep) release on Thursday, US equities made a jittery start to the new week with all three main equity indices closing in the red, the S&P500 is down -0.92%, Dow Jones down -1.2% and NASDAQ off -0.84%.

Looking at the S&P500 sector performance, declines have been led by Energy, Financials and IT, all down just over -2% while defensive sectors have outperformed, Utilities up 0.5% and communications services up 0.67%.

US domestic data releases were positive but didn’t elicit much of a reaction by markets. Instead, it seems investors were more concerns on the outlook for NVidia and AI related stocks, notwithstanding expectations for the chipmaker to beat analysts‘ expectations.

Nvidia shares slipped as Peter Thiel’s hedge fund Thiel Macro LLC sold off its entire stake in the chipmaker last quarter while Alphabet (Google) climbed as Warren Buffett’s Berkshire Hathaway Inc. built a US$4.9 billion stake in the third quarter.

As for the US data releases, construction spending increased 0.2% in August (vs. an upwardly revised 0.2% prior). The bright spot came from Residential construction, recording an increase of 0.8% vs. 0.7% prior. 

Data centres, on the other hand, disappointed, only increasing by 0.1% in August, although the sector is up 25.7% y/y. 

The NY Empire manufacturing extended its recent rise, beating expectations for a small pull back. The index rose to up 18.7 in November, from up 10.7 in October, above the consensus, up 5.8. 

The survey has a solid track record for being quite volatile, that said it is worth noting the October print was the fourth positive reading in five months with gain in the month driven by significant increases in new orders and shipments, the recent trend and details within the survey are suggesting activity in the region is currently enjoying solid momentum.

The decline in US equities overnight didn’t translate into a big bid for US treasuries. The 10y rate traded a tight 4.11-4.14% range overnight, closing the session at 4.13% with the curve showing a mild flattening bias.

There was a temporary jump from the bottom to the top of the range following an announcement that Amazon was looking to borrow US$12bn, its first bond issuance since 2022. Plenty of other investment grade supply is expected to come in this market this week.

Fed vice-chair Jefferson echoed Chair Powell’s view in saying another cut in December was “not a forgone conclusion” and taking a meeting-by-meeting approach to policy was “an especially prudent approach at this time”. 

That said, his comments weren’t as hawkish compared to voting Fed Presidents last week, as he said “I see the balance of risks in the economy as having shifted in recent months with increased downside risks to employment compared to the upside risks to inflation, which have likely declined somewhat recently”.

His comments weren’t market moving, and pricing for the December meeting is around -10bps, so the market sees more chance of the Fed on hold than cutting again next month.

Moving to FX, the USD is stronger across the board with the greenback benefiting from the risk aversion in the air. True to form, the AUD is the G10 underperformer down -0.69% over the past 24 bours. 

Looking at the intraday chart, the AUD has followed the price action of US equities, initially range trading before heading down in line with the decline in US stocks late in the session. 

In other news, tensions between China and Japan have escalated over PM Takaichi’s comments on Taiwan. The PM publicly linked a Taiwan Strait crisis with the possible deployment of Japanese troops, prompting Beijing to unleash a flurry of economic reprisals and threats of more retribution.

Sticking with Japan, Prime Minister Takaichi will meet with BoJ Governor Ueda later today following data showing Japan GDP contracted by -0.4% q/q in Q3, albeit a smaller contraction than the -0.6% expected by consensus. 

There will be interest in the outcome of the meeting, given Takaiichi’s reputation as an advocate of easy monetary policy (and fiscal policy) and the market wondering when, or if, the BoJ will tighten policy over coming months.

Lastly, Canadian annual CPI inflation fell by slightly less than expected to 2.2% from 2.4% in October, while the core measure (average of trim and median) fell slightly more than expected to 2.95%. 

The data had little net impact on the market, with the Bank of Canada easing cycle seen to be over, with its policy rate already having been lowered substantially to 2.25%.

Nvidia braces for hardest AI-era examination as earnings loom, Nigel Green, De Vere Group extract

US equity futures on Monday are advancing alongside tech shares ahead of Nvidia’s earnings Wednesday, as investors now face a moment that demands sharper attention.

The move higher reflects confidence that Nvidia will once again clear a demanding hurdle.

Consensus points to another powerful set of numbers, with analysts looking for close to 55% year-on-year revenue growth and a similar surge in earnings.

The company’s new Blackwell platform, relentless spending by hyperscalers, and sovereign-level AI projects have fuelled broad optimism that Nvidia will not only beat expectations, but set a stronger tone for year-end guidance.

 Yet this is precisely why caution is intensifying.

The market has priced in extraordinary strength from Nvidia and expectations are steep, and the reaction will depend on whether the company proves the AI boom is still delivering expanding profitability rather than just expanding scale.

Investors are responding to discipline. They’re increasingly rewarding companies demonstrating control over spending, clarity of strategy and credible monetisation.

Nvidia sits at the heart of that shift because its growth story is so closely tied to whether AI investments translate into real-time returns.

Pressure around margins remains one of the most important variables. Nvidia has consistently delivered exceptional profitability, but the investment community will examine every detail: data-centre contribution, the pace of Blackwell adoption, the flow of orders from hyperscalers, and any commentary around tightening export rules.

A small miss in any of these areas could change sentiment instantly, especially after one of the strongest multi-year share-price performances in modern market history.

Geopolitical tension is also a real factor. Washington’s technology export controls have restricted Nvidia’s ability to sell advanced chips into China, a market that previously offered meaningful growth potential, and investors will examine any update on how those rules are shaping demand.

Investors will also focus on any indication of how Nvidia is adjusting its long-term planning to the policy environment under President Donald Trump, whose administration has emphasised technology leadership, supply-chain security and strategic control over advanced computing capabilities.

Nvidia’s outlook commentary will likely carry as much weight as the numbers themselves. The market wants answers on sovereign AI contracts, inference growth, and how quickly major customers are digesting earlier Hopper orders before fully transitioning to Blackwell.

Forecasts for another beat are widespread, but investors should not rely on momentum alone. The valuation rests on belief in durability, not just velocity.

Nvidia must show that its leadership in AI hardware continues to expand its earnings power in a way that is sustainable.

The rally in equity futures reflects confidence, yet it also reflects vulnerability.

When expectations tower over reality, even a strong quarter can fall short of what the market has imagined. Investors must look beyond the headline numbers and track the forward signals that matter.

While Nvidia’s results will anchor market sentiment, the broader environment across AI and tech is shifting. Recent earnings from the largest players showed a widening divide between firms exercising measured, profitable investment and those stretching budgets too aggressively. 

Nvidia’s performance will influence how investors judge AI-related spending across the entire sector next year.

Nvidia’s earnings are now a test of conviction across global markets.

The AI revolution continues to reshape everything around us, but investors want evidence that today’s spending becomes tomorrow’s cashflow.

 The opportunities remain substantial, yet the scrutiny is, sensibly, rising at the same pace — and nowhere more so than with Nvidia.

Volatility creates opportunity, Templeton Frankin

The Atlanta Fed GDP now is forecasting 4% GDP growth in the third quarter, a continued acceleration from the first and second quarters. This data is noisy, but it certainly doesn’t suggest any threat of recession.

The stock market remains resilient, with sporadic pullbacks and shots of volatility. We expect this chop to continue into year-end.

The real story remains the same; the economy is resilient, and the consumer is resilient, with the Fed cutting rates in an economic expansion. I reiterate our year-end S&P500 Index target range of 6400–6800 from our Global Investment Management Survey.

Two weeks ago the relative strength index (RSI) for the S&P500 had reached 70. That suggested the tape was “overbought” and should pull back. That is now happening. There have been five readings of 70 or more since May. In every case, those overbought readings preceded a consolidation, with the S&P500 pulling back -3.37% at the median and a 100% hit rate. 

I think we need this market pullback to take the froth out. 

I will be watching for oversold readings going forward, which would be an RSI of 30 or less. We are not there yet. Make your list. I still see dollar-cost averaging on additional weakness as a viable strategy, and spreading one’s bets out seems prudent. 

Investors can use spot volatility to their advantage. From an investment standpoint, VIX readings over 30 would make me interested and readings over 50, aggressive. As of this writing, the VIX is trading at 23; still a ways off.

NVIDIA’s earnings report on November 19 will be a market focal point this week. The reaction to the report/guidance is likely to be more important than the quarterly print itself.

On a 12-month trailing basis, the S&P500 is trading at 26x reported earnings. For context, the 10-year median trailing multiple is 20x. So, it is trading rich relative to the last 10 years.

The market looks forward, not backward, and is clearly expecting continued earnings growth in 2026. With the S&P500 trading at 6700, and the earnings estimate for calendar year 2026 at US$304.48 (up 12% Y/Y), the tape is trading at 21.99x next year’s earnings and, ex the Mag Seven, that number is about 20x.

Since 1990, the median forward multiple has been about 19x. The tape is not cheap, but it’s not crazy either.

We know from history that when the Fed has cut interest rates after a pause, returns one-year out have been positive. 

All in, earnings are a key driver of stock prices, and the forward earnings picture so far looks positive around the world.

We think it makes sense to diversify equity exposure across size, style and geography, and we maintain the view of don’t chase, buy weakness.

Corporate news in Australia

-HSBC is considering the sale of its Australian retail business with National Australia Bank ((NAB)) and Macquarie Group ((MQG)) reported as interested.

-Fletcher Building ((FBU)) is looking for buyers of its residential development unit to lower debt post a -NZ$364m loss.

-Private equity firms have submitted first round bid for Keypath Education’s APAC unit.

-IFM Investors is reported as having raised its stake in Atlas Arteria ((ALX)) to 35% post a $153m block trade.

-TPG Telecom ((TPG)) is raising $688m via a shareholder reinvestment plan and reiterated FY25 guidance.

-MA Financial ((MAF)) has launched the cornerstone for its new ASX listed private credit note aiming to raise $200m for the 7-year note with a $300m market cap.

-Transgrid raises $800m in bonds to fund renewable energy projects.

-Amazon, Temu and Shein are forecast to attain 36% of Australia’s online retail segment by 2026 according to an analyst report.

On the calendar today:

-AU RBA Nov Meeting Minutes

-US Aug Inventories

-AMAERO LIMITED ((3DA)) AGM

-3P LEARNING LIMITED ((3PL)) AGM

-ALS LIMITED ((ALQ)) 1H26 Earnings/Interim Div

-BLUESCOPE STEEL LIMITED ((BSL)) AGM

-CATAPULT SPORTS LIMITED ((CAT)) 1H25 Result/Investor Call

-CLOVER CORPORATION LIMITED ((CLV)) AGM

-CALIX LIMITED ((CXL)) AGM

-DIMERIX LIMITED ((DXB)) AGM

-ENVIRONMENTAL GROUP LIMITED ((EGL)) AGM

-ECHOIQ LIMITED ((EIQ)) AGM

-FUTURE GENERATION GLOBAL LIMITED ((FGG)) ex-div 4c (100%)

-HAZER GROUP LIMITED ((HZR)) AGM

-IMPEDIMED LIMITED ((IPD)) AGM

-L1 GROUP LIMITED ((L1G)) AGM

-LOTUS RESOURCES LIMITED ((LOT)) AGM

-NORTHERN STAR RESOURCES LIMITED ((NST)) AGM

-PALADIN ENERGY LIMITED ((PDN)) AGM

-PEEL MINING LIMITED ((PEX)) Investor Briefing

-PLATO INCOME MAXIMISER LIMITED ((PL8)) AGM

-PLENTI GROUP LIMITED ((PLT)) 1H26 Earnings

-PYC THERAPEUTICS LIMITED ((PYC)) AGM

-READYTECH HOLDINGS LIMITED ((RDY)) AGM

-REGIS HEALTHCARE LIMITED ((REG)) AGM

-RESIMAC GROUP LIMITED ((RMC)) AGM

-SERKO LIMITED ((SKO)) 1H26 Earnings/Investor Call

-TECHNOLOGY ONE LIMITED ((TNE)) FY25 Result

-VHM LIMITED ((VHM)) AGM

-WAM ACTIVE LIMITED ((WAA)) ex-div 3c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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