Nvidia Earnings, US Core PCE Data in The Spotlight This Week

Meanwhile, US data at the backend of last week showed a slip in services sector activity, which has been followed up this week by signs showing that US consumer confidence is also on the slide. The combination of these factors has left investors in a state of skittishness, with the tech sector feeling the brunt of the selling (with the Nadaq100 index now basically flat in terms of year-to-date gains).

Nvidia is due to report earnings (after the bell on Wednesday) and the tech behemoth’s numbers could well be a make-or break event for the market, at least in the short term. After surging 190% in 2024, things have been rather tricker for Nvidia in 2025 due to DeepSeek’s developments and subsequent questions about the scale of AI investment moving forward. The latest numbers from Nvidia are expected to still be impressive (expected revenue of $38b for Q4 fiscal 2025) with the company still enjoying the fruits of its first-mover advantage, but what could really drive sentiment one way or the other could boil down to weather the outlook from the company remains as rosy as before. Particularly amid changing industry dynamics including the cost questions raised by DeepSeek’s budget.

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With investors still feeling unsettled by Trump’s tariff stance, this week’s US Core PCE Price Index data on Friday will be one to watch. If the numbers confirm the underlying fear that inflation is ticking higher again, Fed rate-cutting expectations could be further reined-in. Consensus market expectations are caught somewhere between the Fed delivering one or two rate cuts this year, but any upwards drift in the Core PCE could shift the odds back in favour of there being just one Fed rate cut this year. Or perhaps even none. So, this Core PCE number on Friday could sway Fed expectations and in-turn, market sentiment with regards to the interest rate outlook.

Stock market nerves led to bond-buying being back in vogue as a defensive play. This pushed US treasury yields lower and the USD followed suit. The Dollar is continuing to have a particularly tough time against the yen thanks to the projections of where Japanese yields may be headed this year. Given recent growth and inflation readings in Japan, the BOJ (Bank of Japan) may be in a position where they need to raise rates on multiple occasions and it is this potential scenario which is putting downward pressure on the USDJPY rate (which is down 5.6% year-to-date, with the rate having fallen below the 149 handle).

Gold was unable to capitalise on the move lower in the USD and treasury yields. Bond-buying took the spotlight away from gold on Tuesday, with much of the defensive action taking place in the fixed income market. Gold slipped below the $2900 level, before buyers stepped in and limited the downward move. Support at the $2880 level has held and this is what is stopping a deeper pullback at this point. On the topside, resistance at $2947 would need to be overcome for gold to again hit new highs north of $2950. Overall, upside moves in gold remain likely whilst support at $2880 remains intact, with global trade uncertainties keeping the precious metal well supported.

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