A look at the day ahead in U.S. and global markets from Mike

Dolan

After all that, Nvidia ( NVDA ) beat expectations - which has

become "expected" - and the stock retreated about 5%. This is

still August, after all.

To be fair, the negative market reception to the artificial

intelligence pacesetter's quarterly results overnight was

typical of the reaction to other ostensible "beats" in the

sector in this earnings season. These stocks are expensive, have

come a long way in a short space of time and the bar to impress

is now sky high.

And while the hoopla around the $3.1 trillion-valued

Nvidia's ( NVDA ) earnings this week reflects long-standing concerns

about over-concentration of the market on the fortunes of a

handful of companies, the wider disturbance has been limited.

There were some clouds on the horizon of the megacap chip

designer, but the main concern was simply that the "beat" wasn't

as big as it has been recently. For all the reasonable concerns,

this was far from a fatal blow to the AI theme.

Spin out to other related readouts and the sky still looks

pretty clear. Salesforce ( CRM ) beat Wall Street expectations

on revenue and profit too amid higher spending on its enterprise

cloud products - sending its shares up 3% in extended trading.

Super Micro Computer ( SMCI ) did tumble almost 20% on

Wednesday - but that was after the AI server maker said it would

delay the filing of its annual report a day after Hindenburg

Research disclosed a short position in the company.

And away from the Big Tech and AI world, the market value of

billionaire Warren Buffett's Berkshire Hathaway ( BRK/A )

surpassed $1 trillion for the first time with a modest 1% gain

in its class B stocks.

The upshot ahead of Thursday's bell? U.S. stock futures

were steady to higher after the indexes ebbed

marginally in the previous session.

ATTENTION BACK ON MACRO WORLD

Attention now switches back to the macro world, with the

significant backdrop of a likely first Federal Reserve rate cut

in the cycle next month.

Even hawkish Atlanta Fed boss Raphael Bostic said overnight

that it may be "time to move", even though he retained the right

to see some more data before making up his mind.

On that score the next ingredients come later today with

another critical health check on the labor market and weekly

jobless claims, with the Fed's favored PCE inflation gauge due

out tomorrow.

A punchy 100 basis points of Fed easing is still priced into

the futures market by year-end - so perhaps there's some room to

row that back, regardless of thinking on the first move in

September.

Despite a heavy week of Treasury debt sales, that Fed

picture remains a balm for the bond market. Two-year yields

recorded their lowest New York close in more than a

year on Wednesday and remained subdued at 3.86% first thing

today, and 10-year yields slipped back too.

The global inflation picture still appears benign.

Oil prices remain under wraps even against unsettling supply

threats and continue to register year-on-year losses of up to

7%. U.S. retail gasoline prices are down more than 14% on this

time last year, the deepest annual loss in 12 months.

Inflation fell in six important German states in August due

to lower energy prices, suggesting Germany's national inflation

rate could decline noticeably this month.

Economists polled by Reuters forecast a harmonised national

inflation rate in Germany - the euro zone's largest economy - of

2.3% in August, down from 2.6% the previous month. But the

readout from the states means than could now come in even lower.

With markets already pricing a second interest rate cut this

year from the European Central Bank even before the Fed meets

next month, the euro fell back sharply on Thursday and

lifted the dollar index more broadly.

Just as important, money markets now see a 70% chance of

third ECB cut in October.

And in China, the offshore yuan surged to its

strongest level in more than three weeks despite mainland

stocks there ending in the red again.

UBS on Wednesday cut its 2024 economic growth forecast for

China to 4.6% from 4.9%, as it expects weaker property activity

to have bigger than previously assumed drag on the overall

economy.

But in some sign of detente between the world's two biggest

economic powers, U.S. National Security Adviser Jake Sullivan

met Chinese President Xi Jinping in Beijing on Thursday and

wrapped up three days of wide-ranging talks aimed at easing

tensions between the two ahead of November's U.S. election.

Key developments that should provide more direction to U.S.

markets later on Thursday:

* US Q2 GDP revision, weekly jobless claims, July trade balance,

July wholesale/retail inventories, July pending home sales;

Canada Q2 current account

* Atlanta Fed President Raphael Bostic speaks

* US corporate earnings: Best Buy ( BBY ), Dollar General ( DG ), Ulta Beauty ( ULTA ),

Lululemon, Athletica ( LULU ), Autodesk ( ADSK ), Campbell Soup ( CPB ), Brown-Forman ( BF/A ),

MongoDB ( MDB )

* US Treasury sells $44 billion of 7-year notes, $85 billion of

4-week bills, $80 billion of 8-week bills

(By Mike Dolan, editing by XXXX

[email protected])