U.S. CPI figures could affect interest rates

Back in January, we said that the significant sell-off of Nvidia Corporation (referred to here as “Nvidia” or “the Company”) presented opportunities for bold investors to achieve a good return in the future. Since then, the Nvidia share price has increased by around 31%, proving our prediction correct. Despite Nvidia having yet to resume business activities in China, the company delivered strong results in the second quarter.

Looking ahead, Nvidia appears well-positioned to build on this momentum, with numerous opportunities that could drive further growth and enhance shareholder returns. Moreover, as global demand for AI accelerators expands, the company is likely to offset many of the risks tied to its limited presence in China, potentially paving the way for its stock to reach new record levels. It comes as little surprise that Nvidia’s guidance for the next quarter topped consensus expectations, reflecting the sustained strength of demand for its chips. 

Nvidia’s dominance in the data centre sector is set to grow, with increasing demand for the Blackwell architecture and accelerating shipments of the GB300. The NVL72 is also set to become the preferred system for hyperscalers and major players in the consumer internet sector. The company is projecting Q3 revenue of $54 billion, which exceeds previous estimates of around $52.76 billion. 

These figures suggest that the AI boom is showing no signs of slowing down and that Nvidia still has considerable room to expand its business in the years ahead. However, bear in mind that during the most recent earnings call, CEO Jensen Huang identified China as a $50 billion market opportunity. Nvidia's absence from this market inevitably limits the company's broader growth potential.

Although challenges related to China have impacted Nvidia’s outlook and left some investors feeling dissatisfied, the company’s long-term prospects remain robust. Its dominant position in the rapidly growing AI accelerator market, coupled with surging global demand for advanced chips, should offset much of the risk related to China and support sustained double-digit growth in the years ahead. With the stock still trading at an attractive valuation and offering significant potential for growth, there are good reasons to remain confident in Nvidia’s trajectory.

On Friday 5 September, the U.S. non-farm payroll report revealed that only 22,000 new jobs had been created in August, compared to the expected 75,000. Following revisions, an average of around 

29,000 new jobs have been created in the U.S. over the last three months. Weak U.S. jobs statistics pave the way for interest rate cuts from the Federal Reserve. The U.S. central bank's dual mandate is to keep inflation low and stable while working towards maximum employment.

Clas Ohlson will report its quarterly results on Wednesday, 10 September. Meko is also holding a capital markets day. Both Clas Ohlson and Meko are listed on the Stockholm Stock Exchange. The day's macroeconomic events will begin earlier in China with the release of the Consumer Price Index and Producer Price Index figures for August. This will be followed by Japan's machinery orders for August and Sweden's industrial orders and household consumption for July. From the U.S., we will receive the producer price index for August and weekly oil inventory statistics (DOE).

On Thursday, 11 September, we will receive interim reports from the Swedish company, Rusta, and the Danish company, Chemometec. Later in the evening, Adobe will publish its interim results from the U.S. Moving on to the macro agenda, we will see Sweden's Consumer Price Index for August, OPEC's and the IEA's monthly oil reports, and an interest rate announcement from the European central bank, followed by a press conference. From the U.S., we will also receive the Consumer Price Index for August, as well as the number of initial jobless claims.

On Friday 12 September, the macro agenda will begin with the release of Japan's July industrial production figures. Next, the U.K. will release its Gross domestic product and July industrial production figures. It will be followed by the August Consumer price index from Germany, France and Spain. The U.S. will also publish the Michigan index for September.

A trigger is needed while the risk remains on the downside 

The S&P 500 is in a firm uptrend, trading well above the major moving averages within an ascending channel. The current price is approaching the key resistance level of 6,475–6,500, where profit-taking or a pullback may occur. Momentum is fading, as indicated by bearish divergence in the MACD, which suggests weakening strength despite higher highs. Additionally, the formation of a narrow, short, bearish rising wedge should be noted. Support is found on the downside around 6,455 and 6,360, followed by 6,290.

The NASDAQ-100 remains in a bullish trend, trading above all the key moving averages within a neutral channel. The price is currently testing major resistance between 23,600 and 23,945. Support levels are noted at 23,565, 23,250 and 23,000. Momentum signals are softening; the MACD shows bearish divergence, suggesting waning strength.

The German DAX has shifted from strong bullish momentum to consolidation. The price is struggling to hold onto the rising MA100, which is acting as the first level of support. The next levels of support are 23,365 and 22,700. Momentum indicators confirm weakness: MACD shows bearish divergence and RSI, at 43.9, signals neutral-to-weak sentiment. The index is closer to oversold than to a rebound. Overall, unless support holds and momentum improves, the index faces continued range-bound or downward pressure.

The OMXS30 is in a cautious uptrend and is currently trading at resistance around the 2,650 level, with the next level of resistance at around 2,700. Although MACD recently generated a soft buy signal, momentum remains subdued. Key support levels are MA50, followed by 2,570 and MA200.

The full name for abbreviations used in the previous text:

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence