Spitting chips

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NAB Morning Call 16 min 2 speakers 8 chapters transcribed 21 days ago
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Why did markets ignore the recent Ukraine‑Russia missile escalation?

Phil Dobbie 0:01
Well, not a lot of data around today, it's all about NVIDIA, but earlier on it was all about Ukraine with missiles fired into Russia again, threats made to Kiev, the US has closed their embassy there, but not much reaction, but tensions are rising, and in the UK inflation is rising as well. It's Thursday, it's the twenty first of November twenty twenty four. It's the morning call from NAB. Good morning. Well the US dollar is back on the rise, up half percent today to one hundred and six on the DXY index. The euro is down half percent, down naught point three percent for the pound. The Aussie is half percent low as well on sixty five US cents now. US equities, the Nasdaq ahead of uh Nvidia earnings finished down naught point one percent, the S P and the Russell two thousand both unchanged on the day and a naught point three percent rise in the Dow.
Phil Dobbie 0:48
It's all in the red in Europe with the Eurostocks 50 down half percent at close, the FTSE 100 down 0.2%. US 10 year Treasury bonds are up one basis point to 4.41%, yields higher in Europe as well, up one basis point for 10 year German bundles up three in the UK, France and Italy. Aussie 10 year yields were down one basis point yesterday to 4.56%, a couple of basis points higher on futures this morning. And oil, well it was up but it fell later in this session. So WTI right now is down three quarters of one percent, Brent down 0.3%, or just over 73 a barrel. Comics gold is up 0.8%, Bitcoin up another four percent today, and perhaps the only number that counts today, the Nvidia earnings for Q3, 35.1 billion in revenue.
Phil Dobbie 1:32
The estimate was 33.25 billion, so a beat on that. Data said in her revenue 30.8 billion, the estimate was 29.1%. billion. So fourth quarter, they are expecting 37.5 billion, plus or minus two percent. The expectation was thirty seven point one billion. So sort of in line with analyst expectations. Gross margins uh for the last quarter also meeting analyst expectations around seventy five percent. The earnings per share eighty-one cents against an estimate of seventy-four cents. And yet the share price down almost five percent in So not enough in there to keep feeding the hype, even though it was a beat. And Tapas Strickland is with me today from NAV in Sydney.

How did Nvidia’s Q3 earnings beat expectations and affect equity markets?

Phil Dobbie 2:14
So, Tapas, I'm surprised oil is so well contained. In fact, I'm surprised we're not seeing more sort of risk off mood because the US and the UK missiles have now been fired from you know their their supplies into Russia from From Ukraine. The US embassy in Kiev has been closed temporarily with staff told to seek shelter. A few other European countries have closed their embassies as well, Italy, Spain, Greece, because of specific information of a potential significant attack. But markets seem to have ignored all of that.
Tapas Strickland 2:45
Yes, it's uh markets do struggle to uh price as geopolitical risk events and I guess the overwhelming narrative for the oil market has been uh the reduced level of of Chinese demand and also uh a fair bit of supply in the market as well. And it's unclear exactly whether there is an escalation in geopolitical tensions uh with Russia and Ukraine, whether that actually spills out into the wider oil market. I think the the oil market they'll be looking very closely about whether that does intensify further. And also in terms of the potential of the incoming Trump administration to put greater sanctions against Iran. And I guess they're the big drivers potentially for the for the oil market going forward.
Tapas Strickland 3:25
But when you look across markets, not a huge market reaction to those kind of headlines coming across. But again, markets do struggle to price geopolitical.
Phil Dobbie 3:35
Well we had another geopolitical risk event was uh China's being accused of uh cutting a data cable in the Baltic as well between Finland and Germany. They seem to have pinpointed it was one of their container vessels w uh stopped went offline right at the point where the cable's been cut. Uh they're denying it, of course, just uh a sheer coincidence. But anyway, geopolitics continues in Europe.

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