Global financial markets are keenly awaiting first-quarter earnings results from chip giant Nvidia on Wednesday (Thursday AEST) to gauge the sustained momentum of the artificial intelligence (AI) rally. Nvidia, the world’s largest company by market capitalisation, provides crucial chips and infrastructure for AI, including data centres, memory, power, and cooling. This release follows Wall Street investors taking profits from semiconductor and technology companies last Friday after a record-setting rally. Concerns persist among some analysts regarding potential overspending by US hyperscalers on AI. Renowned fund manager Michael Burry recently warned of overvalued global equity markets, suggesting the Nasdaq 100 Index is heading towards a dramatic reversal.
Closer to home, Australian traders will focus on a speech by Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter on Tuesday for insights into the central bank’s appetite for further rate increases. This marks the RBA’s first public commentary since lifting the cash rate to 4.35 per cent on May 5. Minutes from that decision will also be released. Further clarity on the Australian economy is expected with the Westpac consumer confidence index on Tuesday and unemployment figures on Thursday. The ongoing Middle East conflict continues to fuel inflation through higher oil prices, exacerbating Australia’s economic challenges.
The S&P/ASX 200 Index is anticipated to open slightly lower, having diverged from Wall Street this year with a 1.1 per cent fall against the S&P 500’s 8 per cent gain. The local market is notably weighed down by its vulnerability to fuel price surges and a smaller exposure to AI, instead being dominated by big banks and resources. Recent federal government tax changes, including a minimum 30 per cent capital gains tax on property and shares from mid-2027 and reduced capital gains discounts, have already impacted bank share prices. Commonwealth Bank saw a decline, leading to downgraded earnings projections. Further market softness is also anticipated due to “tax loss season,” where investors sell underperforming stocks.
