TSX seen higher as bumper Nvidia earnings boost sentiment

Investing.com - Canada’s main stock exchange is likely to trade higher Thursday, following the positive global sentiment in the wake of the expectation-busting earnings from artificial intelligence-darling Nvidia.

The S&P/TSX Composite closed Wednesday 0.8% or 241.95 points higher at 30,278.41, bouncing from Tuesday’s lowest closing level since November 7.

Equity indices have bounced in both Asia and Europe, and Wall Street futures are pointing higher, after Nvidia’s powerful earnings dampened  worries around the sustainability of heavy AI spending by mega-cap tech groups.

Nvidia’s earnings boost sentiment

Nvidia (NASDAQ:NVDA), the world’s most valuable company, posted third-quarter sales growth of 62%, the first acceleration in seven quarters, and also said it expected fiscal fourth-quarter sales of $65 billion, plus or minus 2%, compared with analysts’ average estimate of $61.66 billion, according to data compiled by LSEG. 

CEO Jensen Huang shrugged off concerns about an AI bubble, doubts that had pushed Nvidia’s shares down nearly 8% in November, after a surge of 1,200% in the past three years. 

"There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different," CEO Jensen Huang said on a call with analysts.

Huang also reiterated that AI-fueled demand for Nvidia’s chips remained strong beyond just Wall Street’s hyperscalers, and that the company was set to continue benefiting from this trend in the coming quarters.

Beyond the tech sector, earnings from retail giant Walmart (NYSE:WMT) are due later in the session, and will provide more information about how its customers are faring.

U.S. payrolls in spotlight

Canadian economic data Thursday centers around the release producer prices, with the October industrial producer price index due later in the session.

However, most eyes will be on the U.S. Labor Department’s closely watched employment report for September, which is likely to confirm consistently sluggish conditions within the important labor market.

The report was delayed by the 43-day shutdown of the government, and is expected to show that nonfarm payrolls increased by 50,000 jobs in September, while the unemployment rate held steady near a four-year high of 4.3%.

The cancellation of the October report means that the Federal Reserve will still lack much of the data it usually relies on at the time of its next policy meeting on December 10, with the next jobs report now postponed until six days later on December 16.

The Fed’s October meeting minutes, released on Wednesday, showed a split among policymakers, with “many” participants ruling out a December cut, while “several” saw a cut as likely. 

The divide highlighted uncertainty over the U.S. economic outlook and prompted traders to scale back expectations for near-term easing.

Crude helped by U.S. inventories draw

Oil prices rose Thursday, on course for weekly gains, helped by a bigger-than-expected draw in U.S. crude stockpiles.

Brent futures gained 0.8% to $63.99 a barrel, and U.S. West Texas Intermediate crude futures rose 0.8% to $59.72 a barrel.

Both contracts are set to post weekly gains of around 2%, ahead of the November 21 deadline set by the U.S. for companies to wind down their business with Rosneft and Lukoil, Russia’s two biggest oil producers.

Lending some support to prices was the bigger-than-expected draw in U.S. crude stockpiles reported on Wednesday, as crude inventories fell by 3.4 million barrels in the week ended November 14, the Energy Information Administration said.

Elsewhere, gold prices fell, retreating from two straight days of gains as investors sharply pared bets on a December interest rate cut by the Federal Reserve.

Persistent concerns over stretched fiscal spending in the developed world offered some support to gold, especially as Japanese government bond yields continued to push higher. A  growing diplomatic row between China and Japan also buoyed haven demand. 

Spot gold fell 0.5% to $4,056.70 an ounce, while gold futures for December fell 0.7% to $4,055.01/oz.