Nvidia Earnings Blowout Ripples into the Nasdaq 100, US AAA Rating Cut Risk Brews

Nvidia, Nasdaq 100, S&P 500 – Asia-Pacific Briefing:

• Chipmaker Nvidia crushed earnings expectations, stock soars 25%
• Rippling effect carries Nasdaq 100, S&P 500 futures higher after-hours
• Nasdaq eyeing Rising Wedge chart pattern, what are key levels to watch?

Nvidia Earnings Smashed Expectations, Driving Nasdaq 100 Higher Afterhours

Thursday’s Asia-Pacific trading session could be looking at a rosy start after Nvidia Corp. single-handedly buoyed stock market sentiment after releasing its first-quarter earnings report. The now world’s most valuable chipmaker crushed expectations, clocking in a revenue estimate of about USD 11 billion, far above the 7.18b analyst estimate, driven by AI-fueled demand.

During after-hours trade, Nvidia’s stock soared over 25 percent, producing a rippling effect for the tech-heavy Nasdaq 100 (futures) and to a certain extent, the S&P 500 too – see chart below. As a result, Wall Street reversed a good chunk of losses seen during Wednesday’s trading session, which saw the Nasdaq Composite drop 0.61%.

Initial losses on Wall Street were driven by pessimism regarding ongoing debt ceiling negotiations and monetary policy woes. This fueled concerns regarding how a default could increase the risk of a recession. Speaking of which, Fitch Ratings announced that the US AAA rating could be cut, citing the nation’s governance as a weakness relative to its ‘AAA’ peers.

Meanwhile, FOMC meeting minutes showed that policymakers stressed that cuts are “unlikely”, pouring cold water in rising expectations of near-term easing.

Looking ahead, Thursday’s Asia-Pacific trading session is lacking notable economic event risk. That is going to leave sentiment as the key driver for financial markets. As such, the boost to equities from Nvidia’s report could drive optimism in regional indices, such as the Hang Seng Index, ASX 200 and Nikkei 225.

Nasdaq 100 15-Minute Chart

Chart Created in TradingView

Nasdaq Technical Analysis

On the daily chart, the Nasdaq 100 appears to be trading within the boundaries of a Rising Wedge chart formation. So long as the index continues to trade within the pattern’s formation, the immediate technical bias could be bullish. On the other hand, a breakout lower could open the door to reversing gains that have been accumulating since the beginning of this year.

Nasdaq 100 Daily Chart

Chart Created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com