Daily market review
Nvidia revenue doubles as rate pressure spreads
Nvidia, a producer of artificial-intelligence chips and computing systems, confirmed that the data-centre investment wave is still expanding. South Korea raised interest rates again and US inflation remained high, leaving faster earnings growth in a contest with more expensive financing.
This week’s central question
Can faster growth keep interest rates higher for longer?
What changed since yesterday? Nvidia’s revenue rose 106% from a year earlier, South Korea’s central bank increased its policy rate to 3.00%, and annual US personal-consumption inflation was 3.7% in July. These facts strengthen the week’s thesis that robust earnings and economic growth do not automatically deliver cheaper financing. The counter-signal is that real US consumer spending did not increase during the month.
Weakens: inflation-adjusted US consumer spending did not grow in July from June
Next answer: the Federal Reserve chair’s Jackson Hole speech on 28 August
01 Technology and corporate earnings
Nvidia revenue rose 106%, but China exposure and a lower margin outlook will test its high valuation
Facts
Nvidia, a producer of artificial-intelligence computing chips and systems, reported quarterly revenue of $96.221 billion after Wednesday’s regular US session. Revenue increased 106% from a year earlier and 18% from the previous quarter. Data-centre revenue reached $89.0 billion, a 117% year-on-year increase. Gross margin, the share of revenue left after direct costs, was 75.0%. For the next quarter, the company expects revenue of $108 billion with a 2% range and gross margin of 74.0% with a 0.5 percentage-point range. The forecast includes no data-centre compute revenue from China.
Why it matters
The established fact is the extraordinary scale of demand and earnings growth, not the share-price reaction, because the first full regular trading session after the results has yet to take place. Our interpretation is that data-centre customers still have both the capital and the appetite to expand artificial-intelligence infrastructure. The revenue chain therefore reaches beyond chips into memory, networking, power supply and cooling. The lower next-quarter margin outlook is a counterweight, suggesting that production ramp-up and the product mix may become more expensive.
Portfolio impact
The results support global semiconductor, server-component, data-centre infrastructure and electrical-equipment companies exposed to the same investment cycle. The more vulnerable part of a portfolio is highly valued technology shares and the US indices concentrated in them. If revenue growth or margins disappoint, that concentration can transmit one company’s setback across a broad equity allocation. For a euro-based investor, the return on unhedged US positions is also affected by the exchange rate between the euro and the US dollar.
Opportunity and risk
The opportunity is an investment cycle that extends well beyond one company if Nvidia meets its $108 billion revenue outlook and increases next-generation system production without a larger loss of margin. The main risks are tighter export restrictions to China, higher supply costs and slower customer investment. The nearest catalyst is the regular US trading session on 27 August. Beyond that reaction, delivery against the next-quarter revenue and margin outlook will be the more durable test.
02 Central banks and Asia
The Bank of Korea lifted its policy rate to 3.00% because faster growth has not extinguished inflation
Facts
South Korea’s central bank increased its policy interest rate by 0.25 percentage points from 2.75% to 3.00%. This was the second consecutive increase. Six board members supported the decision, while one preferred no change. The bank raised its 2026 economic-growth forecast from 2.6% to 3.3%, and its 2027 forecast from 2.1% to 2.9%. Headline inflation was 2.8% in July, while core inflation, which excludes more volatile components, increased to 2.6%. The bank also raised its 2026 inflation forecast to 2.7%.
Why it matters
The central bank is sending a clear message. Stronger exports and domestic demand allow the economy to grow faster, but they also preserve excessive pressure from prices and housing credit. Higher interest rates make bank funding, mortgages and new corporate debt more expensive even as technology exports lift national income. This is a wider signal for Asia: a powerful semiconductor cycle does not necessarily lead to easier monetary policy.
Portfolio impact
A higher policy rate can increase South Korean banks’ interest income and support the Korean won, all else equal. The other side is pressure on longer-dated Korean bonds, property and highly indebted companies as their financing costs rise. The stronger growth forecast is more supportive for semiconductor and industrial exporters. For a euro-based investor, a stronger won raises Korean asset returns when translated into euros, while a weaker won can erase part of the local-market gain.
Opportunity and risk
The opportunity is a rate increase without a sharp economic slowdown if export income and wages help borrowers service more expensive debt. The main risk is deterioration in household and property-loan quality if higher repayments begin to suppress consumption. The next signals will be August inflation, Seoul housing prices and household-credit data. The next Bank of Korea interest-rate decision is scheduled for 22 October.
03 US economy and interest rates
Real US spending stalled, but 3.7% inflation leaves the Federal Reserve with a difficult choice
Facts
US personal income increased 0.4% in July, disposable income rose 0.5%, and nominal consumer spending grew 0.2%. After removing price changes, real consumer spending was essentially unchanged during the month. The personal consumption expenditures price index increased 3.7% from a year earlier, while the measure excluding food and energy rose 3.3%. The second estimate confirmed that the US economy expanded at a 1.5% annualised rate in the second quarter, although final sales to private domestic purchasers grew 4.2%. Corporate profits from current production increased by $400.9 billion, compared with $74.4 billion in the first quarter.
Why it matters
The data reveal two opposing forces. Real consumer spending stalled, so household demand may be slowing, but income, private domestic demand and corporate profits do not yet show a broad contraction. At the same time, annual inflation remains clearly above the central bank’s objective. Our interpretation is that rapid interest-rate cuts would risk reviving demand, while keeping rates high for longer would increase the chance that weaker consumption spreads into the labour market.
Portfolio impact
Strong profits and private demand are more supportive for US banks, industrial companies and high-quality consumer businesses with pricing power and modest debt. High inflation pressures longer-duration bonds, listed property funds and expensive growth shares because their valuations are more sensitive to higher discount rates. If the US dollar strengthens because interest rates stay high, unhedged US holdings receive currency support in euro terms. A weaker dollar has the opposite effect.
Opportunity and risk
The opportunity is a combination of rising real income and profits with declining inflation, allowing spending to recover without another jump in interest rates. The main risk is a difficult mix in which prices rise faster while real demand weakens. The nearest catalyst is the Federal Reserve chair’s Jackson Hole speech on 28 August. The US employment report on 4 September will then show whether stagnant consumption is already affecting hiring and wages.
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04 China and the manufacturing cycle
China’s industrial profit rose 17.6%, but electronics and carmakers are moving in opposite directions
Facts
Profit at China’s large industrial companies reached 4.582 trillion yuan in January to July, 17.6% more than a year earlier. Profit increased 11.2% in July alone. Revenue rose 6.5%, costs increased 5.9%, and the profit margin improved by 0.54 percentage points to 5.66%. Profit in electronics and communications equipment jumped 110%, and non-ferrous metals smelting profit rose 91.8%, while profit in vehicle manufacturing fell 20.4%. Receivables increased 8.5% and finished-goods inventories grew 10.8%, so the profit surge does not yet represent an equally strong improvement in cash flow.
Why it matters
China’s figures do not confirm an even recovery across the economy. They show a sharp divide between sectors. Demand for artificial-intelligence infrastructure, electronics and metals is lifting manufacturers’ revenue, while falling vehicle profit and faster inventory growth reveal pricing competition and weaker final demand. Our interpretation is that stronger profit can finance new investment, but its quality must be tested by whether companies convert receivables and inventories into cash.
Portfolio impact
The figures are more supportive for Chinese and wider Asian semiconductor, electronics, industrial-metals and networking-equipment exposure. Carmakers, steel, cement and property-related companies remain more vulnerable to price wars and weaker demand. A stronger Chinese manufacturing cycle could help European capital-goods and chemical companies. However, a weaker yuan would reduce part of the local equity return for an investor measuring performance in euros.
Opportunity and risk
The opportunity is that electronics profit growth spreads into broader demand for manufacturing, logistics and raw materials. The main risk is the opposite outcome: inventories and receivables rise faster than final demand, eventually forcing companies to cut prices and margins. The next catalyst is China’s official purchasing managers’ indices on 31 August. These surveys will show whether manufacturing moves back above the 50-point threshold that normally separates expansion from contraction.
05 Europe and economic growth
Germany’s economy grew 0.3%, but export support has not removed weakness in construction
Facts
Germany’s economy expanded 0.3% in the second quarter from the previous quarter, 0.1 percentage points more than the initial estimate. Output was 1.0% higher than a year earlier. Exports supported growth, but investment remained uneven: construction investment fell 1.5% from a year earlier, while equipment investment increased 1.1%. The ifo Institute’s German business-climate index rose from 86.7 to 88.8 in August. The survey asks companies about current conditions and their six-month expectations. A higher reading means sentiment improved, but the index does not have a simple 50-point expansion threshold.
Why it matters
The revised growth figure and better company expectations reduce the risk of an imminent recession in the euro area’s largest economy. However, an export-led recovery remains exposed to global trade, while falling construction investment shows that high interest rates and financing costs are still affecting domestic activity. Our interpretation is that firmer growth gives the European Central Bank less reason to rush rate cuts, although inflation rather than a confidence survey will determine the final decision.
Portfolio impact
Better exports and equipment investment are more supportive for German industrial, automation, logistics and capital-goods companies. Builders, property companies and highly indebted smaller businesses remain more exposed to expensive credit. Lower inflation would support euro-area bond prices, while unexpectedly strong growth could lift yields. A broader recovery would also support the euro, reducing the euro-denominated return from unhedged US holdings if other factors were unchanged.
Opportunity and risk
The opportunity is for the export and equipment recovery to spread into construction, services and domestic consumption. The main risk is another energy-price or trade shock that damages manufacturers’ margins before domestic demand has strengthened. The next catalysts are German inflation, factory orders and the September ifo survey. They will show whether improved expectations are turning into actual sales and investment.
Today’s portfolio compass
Profits are rising faster, but the price of money is not falling as quickly
Two main forces shape today’s market picture. The surge in Nvidia’s revenue and Chinese electronics profit shows that the artificial-intelligence infrastructure cycle can lift earnings across semiconductors, networking, power equipment and cooling. The opposing force is inflation and interest rates. The Bank of Korea raised its policy rate to 3.00%, while US personal-consumption prices increased 3.7% from a year earlier, leaving longer-duration bonds, property and highly indebted companies exposed. The counterweight is stagnant real US consumer spending and still-modest German domestic investment. If demand weakens materially, central banks gain more room to reduce rates. A portfolio therefore needs to distinguish companies already benefiting from structural demand from those where a higher cost of debt can erase the advantages of growth.
Important. This is a general market commentary, not personalised investment advice. Market and company data can change, and investments can fall as well as rise in value.
