PiCK

Nvidia, Retail Earnings to Test US Economy as Shanghai Stocks Pause

Source

Korea Economic Daily

Summary

Nvidia’s earnings report comes as its share price has climbed for two straight months, pushing its market capitalization to nearly $5.7 trillion.
Investors will use earnings reports from Target and Walmart to gauge the US real economy amid a K-shaped economy.
The Shanghai Composite’s downside support remains firm after global investment banks including UBS raised their forecasts for Chinese corporate earnings growth and the real economy continued to recover.

Forecast Trend Report by Period

Walmart, Target earnings due this week

Results may offer a read on America’s K-shaped economy

Shanghai shares may take cues from US-Iran ceasefire talks

Investors in New York this week will focus on earnings from Nvidia and major US retailers, along with developments in ceasefire talks between the US and Iran.

Nvidia shares have surged for two straight months, lifting the chipmaker’s market value back above $5 trillion. Based on last week’s record high, its market capitalization was close to $5.7 trillion. Nvidia is set to report earnings on May 20.

Investors will look to results from Target on May 20 and Walmart on May 21 for clues on the real economy. The reports could also provide a window into America’s increasingly prominent K-shaped economy, with a widening divide between higher- and lower-income households.

The US Senate has approved Kevin Warsh as the new chair of the Federal Reserve, and several Fed officials are due to speak this week. Fed Governor Christopher Waller is scheduled to speak on May 19, while Philadelphia Fed President Anna Paulson and Fed Vice Chair Michael Barr are set for May 20. With oil prices surging and increasing upside inflation pressure, their comments on inflation could offer clues to the next Federal Open Market Committee decision.

The Shanghai Composite Index, which had been advancing recently, has entered a consolidation phase as investors take profits after a sharp short-term rally. Even so, global investment banks including UBS have raised their forecasts for Chinese corporate earnings growth this year, and the recovery in the real economy has reinforced the view that the index has firm downside support.

Investors are also watching whether key data due on May 18, including home prices, industrial production and retail sales, will further improve sentiment toward China. Progress in Middle East ceasefire talks under mediation by the two countries could also ease the risk of a closure of the Strait of Hormuz. That would reduce cost pressures for manufacturers and energy companies and could help drive a medium- to long-term rally in equities.

Park Shin-young, New York correspondent, Hankyung.com nyusos@hankyung.com