Investors expected big results from Nvidia on Wednesday, and the AI darling did not disappoint. The chipmaker tripled its takings from a year ago to bring in $26 billion in revenue last quarter, beating the predicted $24.7 billion. Even better, it predicted that next quarter’s sales will land at a better-than-expected $28 billion. Investors reacted by sending Nvidia’s stock up almost 10%, meaning it’s doubled this year after more than tripling in 2023. The AI boom is clearly still making noise, with Nvidia adding to the clamor as investors’ favorite pick-and-shovel play. Gold briefly hit a new record high on Monday. And at first, it was a bit of a head-scratcher. See, none of the usual culprits seem to justify the scale and velocity of the rally: the economy wasn’t weaker, interest rates weren’t lower, and the US dollar wasn’t falling. So that suggests other factors were behind the rally: geopolitical tensions, the US debt burden, central bank buying, and, well, overall jitters. Gold is often seen as a safe harbor in stormy economic times, holding its value when currencies falter. This surge suggests that investors are worrying about what may be over the horizon. A UK interest rate cut looked a bit less likely after April's inflation data, which came in higher than expected at 2.3%. Core inflation, which excludes volatile food and fuel prices, also dipped less than predicted, coming in at 3.9%. So while headline inflation was at its lowest since July 2021, and very close to the Bank of England’s target, core inflation is still well above target. Plus, high prices in the service sector and rising commodity costs are making policymakers worry that prices could climb again. It’s not a combination that would lead to an imminent rate cut, so investors might have to wait a bit longer for that and hope the economy can continue to hold strong. Business activity picked up in the eurozone for the third month in a row in May, rising at its fastest pace in a year. The purchasing managers index – which tracks the services and manufacturing sectors – showed that the region is picking up steam again after an inflation and energy crisis, and the dampening effects of high interest rates. What’s more, after a long lull, much of the increase in both sectors was spurred on by Germany, whose recovery has helped push the bloc's manufacturing sector to a 15-month peak. |