With reporting season in full swing in SA and abroad, markets remain fluid as companies report earnings and provide outlooks. Market volatility took centre stage as Nvidia stumbled on lofty expectations, while Fed Chair Powell’s dovish Jackson Hole comments sparked the strongest cross-asset rally since April. China’s trillion-dollar stock surge showing bubble warning signs and Trump’s tariff promising $4 trillion in deficit cuts added to the rollercoaster ride.
AI advances
In one of the most anticipated results announcements of the season, Nvidia Corp. (NVDA-NASQ) missed lofty expectations and gave a tepid revenue forecast for the current period, signalling that growth is decelerating after a two-year boom in AI spending. According to Bloomberg, the company’s leadership rejected the notion that interest in deploying AI infrastructure was flagging, with CEO Jensen Huang saying “the opportunity ahead is immense”, predicting $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade. Stocks largely brushed aside their initial drag from Nvidia’s sales outlook, indicating the record-breaking rally’s momentum remains intact.
DC boom time
Bloomberg reports that the data centre investment theme remains strong after Alphabet’s Google (GOOGL-NASQ) confirmed plans to invest an additional $9 billion in Virginia through 2026 to enhance cloud and AI infrastructure across the state.
Rates down, assets up
US stocks rallied after dovish comments from Fed Chair Jerome Powell at the annual Jackson Hole economic symposium, as he all but confirmed that the next rate move will be lower. Powell’s speech sparked the strongest cross-asset rally since April, with major ETFs, treasuries, credit and cryptocurrencies all rallying. The JSE followed suit in an otherwise lacklustre session, closing at the high of the day.
Deficit slimming
President Trump’s tariff drive will cut US deficits by $4 trillion over the coming decade, reports the Financial Times, citing Congress’s fiscal watchdog. This narrowing will help offset concerns that the president’s tax bill will worsen the country’s public finances. The Congressional Budget Office said that tariffs announced so far this year would reduce primary deficits by $3.3 trillion over the period to 2035, while interest payments would fall by an additional $700 billion. The latest estimates suggest that the impact of tariff revenue will dull the fiscal hit from Trump’s landmark spending legislation, the One Big Beautiful Bill Act, which is projected to increase debt levels by $4.1 trillion over the period.
US volatility
According to strategists at Goldman and Deutsche Bank AG, US investors will need to confront tepid US company data, concerns about US trade tariffs, and President Trump’s latest broadsides against the Federal Reserve.
No fair!
Tesla (TSLA-NASQ) CEO Elon Musk has sued Apple (AAPL-NASQ) and OpenAI for allegedly favouring ChatGPT on iPhones and stifling AI competition.
Bubble trouble
China’s $1 trillion stock rally is starting to exhibit signs of entering bubble territory, leading some of the nation’s brokerages and asset managers to cut back on margins and limit purchases. China’s commercial banks are also tightening oversight of clients using credit cards to fund stock investments. According to Bloomberg, the rally is being driven by cash-rich investors shifting into stocks amid a lack of alternatives. “Markets might be expecting, either correctly or incorrectly, that macroeconomic fundamentals will improve,” said Homin Lee, senior macro strategist at Lombard Odier Ltd. in Singapore. “But a bull market will not be sustainable if inflation remains close to 0% and corporate pricing power faces severe headwinds from weak domestic demand.”
China inflows
Inflows to US-listed emerging market ETFs totalled $274.9 million in the week ended August 22. China recorded the biggest inflow, of $223.3 million, led by the iShares MSCI China ETF (MCHI-NASQ). According to comments from Malcolm Dorson, senior portfolio manager at Global X Management, carried by Bloomberg, easing trade tensions with the US has helped improve sentiment across Chinese equities.
Dominant dollar
Most emerging-market currencies weakened against a resurgent US dollar as focus shifted to a key reading of US inflation data that has the potential to reshape interest rate-cut expectations. The rand was among the biggest decliners of the session, along with the Hungarian forint and the Czech koruna.
Aspen on slippery slope
Aspen Pharmacare Holdings Limited (APN-JSE) shares slumped after the company said it will report a full-year loss following a R4.1 billion write-off. Operating earnings from the manufacturing business for the 2025 financial year are also expected to be roughly 40% of what was reported in the previous financial year.
Stock focus: MTN Group Limited
MTN Group Limited (MTN-JSE) delivered a resilient operational performance in the first half of its financial year. Accelerating momentum in Nigeria and Ghana underpins investor confidence in earnings growth, even as local operations continue to lag. These results keep this stock firmly in the buy category.
