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Markets were in Limbo for most of this week, with investors anxiously waiting on the world’s biggest company to eventually set the mood.
Nvidia earnings loomed like a grand final for the AI, with punters largely sitting on their hands to see whether the world’s most important stock could once again justify its astronomical valuation.
It did, with Nvidia smashing expectations after Wednesday’s closing bell, delivering a staggering US$96.2 billion (A$147 billion) in revenue and gliding towards an eye-watering US$108 billion (A$165 billion) for the current quarter. The result sent shares soaring more than eight per cent and pushed the chip giant’s valuation beyond US$5.5 trillion (A$8.4 trillion) – a figure now approaching the size of the entire London Stock Exchange.
Wall Street duly exploded higher on Thursday, with investors once again deciding the AI party still has plenty of life left in it.
Gold continued last week’s charge higher after the US Treasury quietly expanded its buyback program for longer-dated government bonds, doubling the size of purchases from a maximum US$2 billion (A$3.1 billion) per operation to a minimum of US$4 billion (A$6.1 billion).
Officially, the move is designed to improve liquidity and smooth market functioning. Unofficially, it looks suspiciously like Washington is trying to keep a lid on bond yields as America’s debt pile marches deeper into uncharted territory.
The irony is hard to ignore. The world’s reserve currency is increasingly relying on financial engineering to support confidence in its own debt market.
Gold bugs, unsurprisingly, have noticed. The yellow metal continued its march higher as investors sought refuge from a US dollar and a Treasury market that appear to require ever-greater intervention.
Back home and just as BHP became Australia’s biggest company, Prime Minister Anthony Albanese headed West. Touring Perth and the home of resources, he offered an iron-clad guarantee that Canberra would not touch WA’s GST arrangements – Albo word, of course, is his bond, so we’ll see how long that lasts.
The Prime Minister also found himself in an increasingly uncomfortable stoush with WA over domestic gas reservation and mooted export restrictions. Prime Minister Albanese locked horns with WA Premier Roger Cook over domestic gas reservation policies, with the Federal Government seemingly eyeing WA’s carefully managed supply to solve the energy woes currently plaguing the eastern states.
Premier Cook was having none of it, launching a full-throated defence of the state’s long-standing energy policy. He argued that Western Australia already directs about 20 per cent of its gas production into the domestic market, comfortably exceeding the very targets Canberra appears to be chasing for the rest of the country. The dispute cuts to the heart of Australia’s energy dilemma: the east is battling soaring power prices and gas shortages, while the west, having had the foresight to protect its domestic supply years ago, is now being asked to share its lunch.
The Bulls N’ Bears Runners roll call this week perfectly reflected that sentiment. A plucky AI data centre player took out the top spot with a truly breathtaking run, while a pair of junior gold explorers rode the wave of renewed interest in WA’s prolific goldfields.
The Bulls N’ Bears Runner of the Week is AI data centre player X2M Connect, which went from prospecting to landing its first binding data centre agreement this week – and the market’s reaction was nothing short of explosive.
X2M has secured a pivotal role in the design, delivery and ongoing management of an AI-enabled, high-density GPU facility with an estimated project cost north of a whopping $250 million. Initially, the company will provide design services to support the development approval process; however, the scope could then expand to include full project delivery and ongoing management once the project gets the green light.
