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CAC 40: Nvidia effect outweighs Fed disappointment

( - The Paris Bourse is set to open higher on Thursday morning, with Nvidia's good results outweighing concerns about the Fed's rate hike, whose "minutes" proved rather disappointing.

At around 8:15 a.m., the "future" contract on the CAC 40 index - for delivery at the end of June - was up 13.5 points at 8092 points, pointing to a session start in positive territory.

The American giant Nvidia, now the world's third-largest capitalization behind Microsoft and Apple, is expected to shine again today after significantly outperforming expectations with its quarterly results, which benefited from strong demand for its AI-dedicated graphics chips.

The Californian group's stock, already up 91% since the start of the year, climbed a further 6% in electronic trading.

Nvidia didn't disappoint with its quarterly results', says Christopher Dembik, investment strategy consultant at Pictet Asset Management.

'It's been a long time since the global economy has been so dependent on a single company', the analyst points out.

'For the stock markets, Nvidia should continue to be a must-have this year, and probably in the years to come', he adds.

Some professionals, however, note that the semiconductor manufacturer's tour de force is not translating into as explosive a reaction on the markets as in the past.

"Admittedly, Nvidia continues to exceed expectations, but not as spectacularly as its last publication in February, which triggered a surge of over 16% in its share price the following day", point out Deutsche Bank analysts.

However, Nvidia's performance overshadows the concerns raised by the minutes of the Federal Reserve's latest meeting, which contained a number of unpleasant surprises.

While Jerome Powell, the institution's chairman, has repeatedly stated that the central bank's next move "would not be a rate hike" (i.e., obviously a rate cut), some of his colleagues don't seem to see it that way.

For these FOMC members, nothing should be off-limits and they should not hesitate to raise rates if necessary.

In short, these "minutes" show that the Fed's policy committee will probably have to wait until the end of the summer before cutting the key rate.

According to the CME Group's FedWatch barometer, the probability of a rate hike in September is now estimated at 50.3%, compared with 51.6% yesterday, but remains above the 50% mark.

On the bond front, the yield on 10-year Treasuries is little changed by these comments, still hovering around the 4.43% mark as it has done since the start of the week.

In Europe, the latest PMI indices will be released later this morning, providing further information on the state of economic recovery on the Old Continent.

"The composite PMI rose from January to April", say the teams at Oddo BHF.

Fundamentally, the reasons for an improvement in the business climate seem stronger in 2024 than in the last two years, which have been marked by inflation and rising interest rates", the private bank points out.

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