Nvidia helps lift all three US indices into record highs

• Nvidia blockbuster gains lift US indices into record highs
• DAX dragged by concerns over growth
• Earnings season heading towards its conclusion on a positive note

European markets have set off on a somewhat tame path following a blockbuster US session that saw an incredible $277 billion gain for Nvidia that single-handedly pushed all three major US indices into fresh record highs. That marks the biggest single stock gain in history, highlighting recent claims that Nvidia is the most important stock in the world despite remaining $1 trillion smaller than Microsoft. The emergence of AI as a huge new source of investment and growth has come at a particularly advantageous time, enabling a continued push into record highs despite an unwelcome environment of tight monetary policy in the face of global inflationary pressures.

The DAX has been losing traction in early trade, following a confirmation that the economy shrunk by a concerning -0.3% in the fourth quarter. After years of carrying the eurozone project, Germany now stands out as the main cause of concern for the region, with Spain’s surprisingly strong 0.6% Q4 GDP rate helping to ensure the wider eurozone did not fall into recession. For the ECB, this German weakness will undoubtedly provide cause concern, with yesterday’s manufacturing PMI collapse providing a timely reminder that 2024 looks to have kicked off on an equally difficult footing for this industrial powerhouse. Nonetheless, today’s DAX losses pale in comparison to the impressive gains seen throughout the index over recent months, with the index hitting fresh record highs for four consecutive weeks now.

Looking ahead, a relatively quiet calendar should bring a continued focus on big tech. With earnings season looking increasingly likely to end on a positive note given the fact that we continue to hit record highs after 85% of the S&P 500 have reported. Nonetheless, with the likes of Dell, Salesforce, and Berkshire Hathaway reporting next week, earnings continue to come thick and fast.