- FTSE 100 opens flat
- UK banking stocks in focus
- US futures trade lower after NVIDIA results
- Salesforce up 4.3% in after-hours trading
- Brent oil moves higher after 2 days of losses
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“The FTSE 100 opened flat this morning as investors try to digest last night’s US earnings from AI giants like NVIDIA. Investors tend to overstate the importance of one set of quarterly results in the grand scheme of a structural shift like we’re seeing with AI. Like many before, this cycle won’t be a straight line, but there have been plenty of positives from big tech earnings to suggest the AI train is just getting started.
UK banking stocks came under some pressure yesterday after reports suggested the new government may be looking at additional taxes on the sector. There’s precedent here, the sector already suffers from elevated taxes in the form of the bank levy and corporation tax surcharge. Details are thin on the ground but given any tax would likely be UK focused, this would impact domestic players like Lloyds and NatWest more so than those with a global presence.
Trading in US futures suggests markets across the pond will open a little lower this afternoon after NVIDIA earnings failed to re-ignite the AI flame. Putting aside the noise, investors should be happy – the numbers were strong, the demand outlook remains positive, and commentary from management on the earnings call should leave investors feeling confident about the future. News that the new Blackwell product will start contributing to revenue in the fourth quarter was positive and highlights NVIDIA’s ability to adapt to issues on the fly. Aside from simply not beating by a large enough margin, the other bit of weakness was the warning that Blackwell launch costs would weigh on fourth-quarter margins – but we’re splitting hairs really.
Salesforce impressed last night with earnings that beat estimates and paved the way for a profit upgrade. As the world’s largest customer relationship management platform Salesforce has a treasure trove of company data to leverage and, while the backdrop for businesses is still tough, it’s in a great spot to benefit from new AI advancements. Some estimates suggest that around 75% of the benefits from AI will come from front-office tasks like customer operations and marketing, areas where Salesforce has a dominant position.
Brent oil staged a mini-recovery up 0.22% this morning to trade around $78.8 per barrel. Supply concerns finally managed to gather enough pace to outweigh the demand weakness that’s expected to come. Several leading banks have cut their oil price forecasts as economic weakness continues in key markets like China.”
