First Light News: Strong Nvidia Results Lift Markets; October US Employment Report Cancelled

Revenue was up 62% YY to US$57 billion, beating expectations of US$55 billion, with data centre revenue generating US$51 billion (vs forecasts of US$49 billion).

Risk Sentiment Catches a Bid On Upbeat Nvidia Results

The NVDA Stock rallied around 5.0% in after-hours trading following the earnings announcement, with this optimism providing a tailwind for related companies such as CoreWeave. As of writing, US equity index futures are higher across the board, with S&P 500 contracts up by 1.3%, and Nasdaq 100 contracts adding nearly 2.0%. Asia-Pac Stock markets were also green overnight, catching a much-needed bid.

The buildup to the earnings release had been considerable, and the upbeat results have somewhat helped alleviate market concerns regarding a potential AI bubble. Nvidia’s Founder and Chief Executive, Jensen Huang, actually pushed back against speculation of an AI bubble, noting that the company observes ‘something very different’.

In the press release, Huang stated ‘Blackwell sales are off the charts, and cloud GPUs are sold out. Compute demand keeps accelerating and compounding across training and inference, each growing exponentially. We’ve entered the virtuous cycle of AI. The AI ecosystem is scaling fast, with more new foundation model makers, more AI startups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once’.

October US Jobs Data Shelved; September’s Numbers Key

While risk sentiment has evidently improved on the back of Nvidia’s results, the Bureau of Labor Statistics announced that October’s jobs report will not be published, and will essentially merge the data into November’s print. As one might imagine, this leaves a divided Fed in a tricky spot ahead of its December meeting.

On the back of this, we have seen a notable hawkish repricing in Fed rate futures and the USD was strongly bid in recent trading. Markets are now assigning just a 25% chance of a December cut, suggesting the Fed may keep the target rate on hold in the 3.75% to 4.00% range. Given the data gap, the Fed will essentially be flying blind; therefore, the expectation of a pause is understandable.

This renders today’s delayed September employment report all the more important; it will be the last comprehensive jobs data that policymakers see before they convene next month. Per the LSEG calendar below, economists expect 50,000 new jobs added (estimate range: 120,000 to -20,000), a jump from 22,000 in August, with the unemployment rate forecast to hold steady at 4.3%.

Earlier in the week, I noted that should we observe a meaningfully soft jobs print – one that sees payrolls drop into negative territory – this could prompt USD downside and increase rate-cut expectations. Conversely, a positive release north of 70,000 would likely catch markets off guard, fully pricing out any prospects of a cut next month and adding to the recent USD strength.

Written by FP Markets Chief Market Analyst Aaron Hill