Farhan Badami, market analyst at eToro Group Ltd, shares his three things to watch in Australia in the coming days.
Nvidia earnings
Tech investors seem to be a little rattled right now. Key stocks like Tesla, Palantir and Nvidia suffered sharp selloffs late last week as investors seem increasingly keen to reduce their exposure to the tech industry.
AI bubble fears continue to hang overhead, and sell-offs from institutional players are creating an atmosphere of fear around hardware stalwarts.
However, short-term concerns don’t wipe away long-term promise, and from where I’m standing, Nvidia still seems to be in a near-optimal position to benefit from AI’s ongoing growth and integration. Scepticism hasn’t nullified AI’s broad utility, and recent advancements have not made AI any less reliant on the kind of hardware that Nvidia produces at a world-class standard.
Record highs for Nvidia’s shares aren’t that far in the rear view, and with some analysts already raising their price targets ahead of this week’s earnings, there’s an obvious lesson here in looking beyond the fog of last week’s sell-offs.
WiseTech AGM
When it comes to WiseTech’s recent performance and reputation among investors, turbulent may be an understatement. Shares are down almost 50% YTD - damaged significantly by the alleged actions of executive chair and founder Richard White, as well as the AFP raid due to suspected insider trading and ongoing instability within the company.
Looking at the headlines, it’s a bleak and complex state of affairs, but Wisetech as a company is still a fundamentally good proposition. Revenue continues to grow, and its name recognition as a logistics software leader is more than earned.
This week’s AGM represents a challenge. The pressure is now on the company to both acknowledge and remedy the numerous reputational concerns plaguing the share price by clearly communicating a way forward. While much of what has been levelled at White is still mostly allegations, investors will want clarity sooner than later.
A clean, decisive and honest approach to this meeting could easily undo a chunk of the losses WiseTech has suffered this year – and while failure to do so may not affect its presence within the software market, the potential for ongoing harm to the share price is clear.
RBA Minutes
Set to be released tomorrow, this month’s RBA minutes will provide insight into the board’s unanimous decision to leave the cash rate on hold for the third consecutive month, after core inflation rose in September.
This month’s hold came as little surprise following September’s stronger-than-expected inflation print, and has reinforced that price pressures are proving hard to shake. The RBA’s goal of getting inflation under control is going to take longer than anticipated, with the board likely needing to keep its foot on the brake for longer, putting rate-sensitive sectors under pressure.
Looking ahead to December’s rate decision, while October’s unemployment rate was a healthy report on paper, it still didn’t provide the signal the RBA is looking for. In fact, it has essentially dampened any chance of an interest rate cut in the near-term, with the data suggesting that businesses are still holding on to staff even as growth slows, keeping wage pressures alive and making it harder for inflation to drift back to the RBA’s 2-3% target.
Michele Bullock and the board have already been clear that they are in no rush and won’t risk premature easing, even if that means being seen as a Scrooge with December’s rate call. For now, the chance of a Christmas miracle cut for borrowers is near non-existent, and rates are likely to stay on hold until the board gets a clearer sign that inflation is trending lower.