After a losing run, the ASX is set to open higher today.
ASX Futures imply the ASX 200 will open 31 points higher, up 0.44%.
It comes on the back of a stronger session on Wall St, which ended its three-day slide as uranium stocks surged in line with India and Japan embracing nuclear power.
Bloomberg reported yesterday that Japanese Prime Minister Fumio Kishida said that his government plans to explore and develop next-generation nuclear power plants, while India is looking at another huge nuclear project.
“Nuclear power and renewables are essential to proceed with a green transformation,” Kishida said. “Russia’s invasion changed the global energy situation.”
Energy stocks in general climbed on higher oil prices.
“Oil’s outlook still looks positive here as shale is not taking off, ESG constraints remain, and strong demand for refined product exports,” Oanda senior market analyst, Ed Moya said.
“US stockpiles will likely continue to decline over the coming weeks over strong export demand. Oil prices could surge over the next few weeks if OPEC+ is forced to cut output and if Iran nuclear deal talks falter again. The Saudis don’t want to see oil prices disconnected from market fundamentals and that should suggest this oil market will remain very tight.”
Here’s what we saw (source Commsec):
- The Euro rose from near US$0.9910 to highs near US$0.9996 and was near US$0.9970 at the US close.
- The Aussie dollar held between US68.75 cents and US69.25 cents and was near US69.10 cents at the US close.
- The Japanese yen eased from near 136.17 yen per US dollar to JPY137.20 and ended US trade near JPY136.10 at the US close.
- Global oil prices rose by around 1% on Wednesday. Supporting prices were comments to the effect that the Iran nuclear deal was unlikely to be revived - a development that would prevent Iran exporting more oil. Also supporting prices was data which showed that US crude inventories fell by 3.3 million barrels in the past week, well up on forecasts for a 933,000-barrel drop.
- The Brent crude oil price rose by US$1.00 or 1.0% to US$101.22 a barrel.
- The US Nymex crude oil price rose by US$1.15 or 1.2% to US$94.89 a barrel.
- Base metal prices were lower by as much as 1.8% on Wednesday with nickel down the most. Zinc bucked the trend, up by 1.1% .
- The gold futures price rose by US30 cents an ounce or less than 0.1% to US$1,761.50 an ounce.
- Spot gold was trading near US$1,752 an ounce at the US close.
- Iron ore futures rose by US23 cents or 0.2% to US$105.15 a tonne.
The biggest loser
Nvidia was one of the biggest losers on Wall St overnight after forecasting another revenue shortfall for the quarter.
“We expect gaming and pro visualisation revenue to decline sequentially and OEM and channel partners reduce inventory levels to line with current levels of demand and prepare for our new products generation,” Colette Kress, Nvidia’s chief financial officer, told analysts. “We expect that decline to be partially offset by sequential growth in automotive.”
Nvidia forecast revenue of $5.78 billion to $6.02 billion, while analysts surveyed by FactSet average forecast earnings of 85 cents a share on revenue of $6.91 billion.
“We are navigating our supply-chain transitions in a challenging macro environment and we will get through this,” Jensen Huang, Nvidia’s founder and chief executive, said in a statement, before the company addressed inventory issues.
“Our supply arrived a little bit late in the quarter for some of our key products that we needed to get out,” Kress told analysts. “And putting that together caused some disruption in our logistics and distribution.”
PC sales and videogame gear spending pulled back, which affected earnings.
Nvidia reported second-quarter net income of $656 million, or 26 cents a share, compared with $2.37 billion, or 94 cents a share from the same period last year. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 51 cents a share, compared with $1.04 a share in the year-ago period.
“The decline in gaming revenue was sharper than anticipated, driven by both lower units and lower ASPs,” Kress said. “Macroeconomic headwinds across the world drove a sudden slowdown in consumer demand.
“As noted last quarter, we had expected cryptocurrency mining to make a diminishing contribution to gaming demand, and we are unable to accurately quantify the extent to which reduced crypto mining contributed to the decline in gaming demand,” Kress told analysts.
Germany prioritises oil cargo
In Germany, oil freight will come ahead of passenger carry as the country looks to mitigate an energy crunch ahead of winter.
"We have a shortage situation on the rails – there’s a real run on the rails right now, the rails are at full capacity," Transport Minister Volker Wissing said.
"That means that if additional fuel transports are temporarily necessary we would have to prioritise them, which could mean that passenger trains would have to wait. That won’t be an easy decision."
With lower water levels on major rivers like the Rhine, coal and oil have been shifted off ships and onto rail, which will help get fuel to power stations quicker.
The Russia Ukraine war is having a major impact on supply, with Germany accusing Russia of weaponising energy supplies.
Just on Wall Street’s recovery
Oanda analyst Edward Moya said the "Fed still has a lot of tightening to do".
"Today’s rebound is small and on light volume, which means most traders are playing the waiting game until Powell’s Jackson Hole Symposium speech," he said.
"Powell’s fight against inflation might send the US economy into a recession late next year, but for now he needs to stick to the hawkish script.”
Investors are heavily focused on Powell’s Friday speech in the US and are hoping, but not expecting, hints of a coming respite in aggressive interest rate hikes.