The shares fell well short of the 8-10% rally that the market was prepared for, and posted a meagre 0.53% rise post earnings. But nevertheless, the stock hit a fresh ATH even though the move was far less than impressive. Nvidia couldn’t offer the major US indices a fresh record, as Big Tech companies were mostly sold yesterday. Google lost 4.5% on Department of Justice’s demand to sell Chrome. But both the S&P500 and Nasdaq gained the day after the Nvidia earnings, and consolidate near ATH levels.

The earnings season gently comes to an end with a stronger-than-expected performance for most of the S&P500 stocks. 8 of the 11 sectors in the index posted earnings growth, showcasing broad resilience despite macroeconomic challenges. Energy companies continued to face challenges due to weak oil prices but Big Tech has been a standout and the overall earnings proved better than the market expectations. The numbers didn’t point at any type of economic distress in the US and maintained the soft-landing narrative – also supported by broader macroeconomic data – well alive.

Of course, the strong economic growth is certainly good for business, but strong business is not necessarily good for taming inflation. Add to that Trump’s plans to cut taxes and impose tariffs on China and other partners, the inflation outlook doesn’t look supportive of sustained rate cuts from the Federal Reserve (Fed). As such, the US yields continue to feel the pressure of uncertainty regarding what the Fed should do in its December meeting. The probability of a December cut improved to 60% as the continuing claims in the US rose to a 3-year high, but the decision is more close to call than many think, imo.

In the FX, the US dollar is extending its rally, not necessarily on Fed expectations but on a fair amount of safe haven demand amid the mounting geopolitical tensions in Ukraine. The latest news suggest that Russia launched ‘a new kind of ballistic missile in to Ukraine’ as a response to Ukraine’s use of US missiles on Russia earlier this week. The latest escalation results in fresh sanctions against Gazprombank, which was the last major Russian financial institution that wasn’t concerned by the earlier sanctions as some European nations continued to pay their gas purchases from Russia via Gazprombank. They can’t anymore.

Even though Europe has a reduced exposure to Russia, cutting whatever was left of the Russian gas supplies will reduce the amount of supplies on the continent and threaten to boost gas prices as reserves decline. The European gas futures show an accelerated rally this week, while the US gas futures are exploding on the news. US nat gas broke above the summer peak, and this time, has probably taken out the $3 support sustainably. The upside pressure won’t be comparable to what we saw in the early days of the Ukrainian war, but the tense geopolitical environment has the potential to push prices toward the 3.50-3.60 range -the January peak.

Elsewhere in energy, the mounting geopolitical tensions give a hand to oil bulls. The barrel of US crude has stepped above the $70pb level, but faces a thick layer of offers between the $70 and 73pb range. The combination of weak global demand and ample supply keeps the macro-focused bears in appetite near these levels. But, the environment turns positive for tactical longs and US energy companies that will see the additional opportunity to increase their market share in Europe.

In the FX, the US dollar’s recent rise pushed the EURUSD down the 1.05 cliff yesterday, and Cable extended losses below the 1.26 mark. Investors will watch the flash PMI figures this morning to figure out how to rectify their euro and sterling positions, but the major driver of the market right now will likely remain the haven flows that favour the greenback against major peers. This being said, the solid appreciation of the US dollar, combined to rising energy prices, will likely ring the alarm bell among the European Central Bank (ECB) and the Bank of England (BoE) doves, and get them to tame their dovish expectations. The latter will probably support a recovery in both the euro and sterling once the geopolitical dusts settle.