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A decline in bond yields paired with anticipation for the release of Nvidia’s quarterly results, fuelled Wall Street to close in positive territory overnight. The Nasdaq extended its rally into a third straight session, adding 1.6%, while the Dow Jones rose 0.5%, and the S&P500 gained 1.1%.

After the closing bell Nvidia, the chip making stock leading the AI hype in 2023, reported quarterly earnings including record revenue up 88% in Q2 from Q1 to US$13.51bn, and record data centre revenue up 141% on Q1 to US$10.32bn. Net income popped from US$656m in the three months ended July 31st, 2022, to US$6.188bn in the three months ended July 30th, 2023. The outlook for the third quarter was a key inclusion of the report to determine if momentum for AI and semiconductors is slowing, but it appears it’s still all systems go as Nvidia revealed outlook for revenue to be US$16bn, and GAAP and non-GAAP gross margins are expected to be 71.5% and 72.5% respectively. When Wall Street awakes on Thursday all eyes will be on the Nvidia share price.

The benchmark ten-year treasury yield that hit its highest level since 2007 on Monday, dipped more than 11 basis points overnight to 4.21% which increased investor appetite for equities.

Inflationary pressures and expected cooling consumer demand are weighing on apparel giants like Nike as the sports brand fell for a 10th straight session on Wednesday, while Footlocker tumbled 28% after reporting a decline in sales and lowering its forecast for the second time this year.

Over in Europe markets closed marginally higher across the region on Wednesday led by a jump in utilities stocks adding 1.1%. Germany’s PMI figures were released overnight showing a steep downturn in manufacturing output alongside a plunge in business activity. The STOXX600 rose 0.4%, Germany’s DAX added 0.15%, the French CAC lifted 0.08%, and in the UK, the FTSE100 rose 0.68%.

Locally yesterday, the ASX closed 0.38% higher as strong gains for consumer staples, materials and consumer discretionary stocks offset the tech sector’s near 5.3% decline. The reason for the tech sector slide was on the back of WiseTech Global tumbling 20% on weaker-than-expected guidance for FY24 and a return to acquisition growth strategy which will squeeze profit margins.

Santos shares hit a one-month low yesterday after the mining giant released first half results including profit diving a 32% dive in profit due to lower oil prices and softer production levels.

Woolworths released FY23 results yesterday that sparked a rally for the supermarket giant, a day after competitor Coles released disappointing results.

In FY23 Woolworths reported Group sales up 5.7% to $64.3bn, which cements the company’s leadership position in the Australian market after Coles posted Group Sales revenue of $$41.47bn which was growth of 5.3% on FY22, which fell short of Woolworths growth. Across the broader metrics, Woolworths excelled in FY23 including gross margin as a % of sales rising 26.8%, group EBIT up 15.8% to $3.116bn, NPAT up 4.6% to $1.618bn and the final dividend rose 9.4% to 58cps, while Coles held the final dividend flat at 30cps. In response to the strong FY23 results, investors sent the WOW share price up 5% intraday and closed the day up 3.5%.

What to watch today:

• Ahead of the new local trading session today, the SPI futures are expecting the ASX to open 0.51% higher on the back of Wall St rallying overnight.
• On the commodities front this morning, oil is trading 1.24% lower at US$78.65/barrel, gold is up 1.03% at US$1917/ounce, and iron ore is up 3.21% at US$112.50/tonne.
• AU$1.00 is buying US$0.65, 93.87 Japanese Yen, 50.33 British Pence and NZ$1.08.

Trading Ideas:

• Bell Potter has downgraded the rating on Cedar Woods Properties (ASX:CWP) from a buy rating to a hold rating and have slightly increased the price target on the company from $5.20 to $5.30 following the release of the company’s full year FY23 results. For the year, Cedar Woods reported turnover increased to $391m which was stronger than expected due to higher settlements falling in June, a slight decrease in the full year dividend to 20cps from 26cps, and no guidance was offered for FY24. The reduction to a hold rating is on the back of Cedar Woods shares performing well in CY23, up 23% from December 31st 2022, and trading at a 9.9x FY24 expected EPS. The recent share price strength means Bell Potter expects shares to mark time until there is more certainty in the path of interest rates and guidance from the company.
• And Bell Potter has decreased the price target on Wisetech Global (ASX:WTC) and maintain a hold rating on the leading global provider of logistics services software following the release of the company’s FY23 results. While the FY23 results were in line or slightly above Bell Potter expectations and the company’s own guidance, the guidance for FY24 for EBITDA was below Bell Potter and market expectations driven by recent acquisitions thus changing the price target to factor in lower-than-expected margins as the company undertakes an acquisition growth strategy.