TSX up slightly ahead of NVIDIA earnings

Canadian and U.S. markets showed muted gains Wednesday ahead of NVIDIA's earnings release, which is expected to cause significant stock movement. Oil prices rose on potential Russian sanctions and OPEC+ production decisions, while gold traded softly. Investors are focused on NVIDIA's EPS estimates of $0.89 and revenue of $43.1 billion, with margins and outlook in China being key drivers for the stock.

Analysis

Global equity markets exhibited a cautious tone on Wednesday, with Canadian indices like the S&P/TSX 60 and S&P/TSX Composite registering marginal gains of approximately 0.1%, following a more robust 0.75% to 1% rise the previous day. Similarly, U.S. stock indexes, including the S&P 500, NASDAQ Composite, and Dow Jones Industrial Average, showed minimal changes, down by 0.04%, 0.04%, and 0.02% respectively. This subdued activity reflects investor anticipation for NVIDIA Corp's (NASDAQ:NVDA) after-hours earnings release, which is projected to potentially cause a 6% swing in its stock price. Current consensus estimates for NVIDIA are an EPS of $0.89 and revenues of $43.1 billion, with gross margins around 71% being a critical metric to watch for signs of competitive pressure or trade war impacts. CEO Jensen Huang's commentary on China sales restrictions and the company's overall outlook is expected to be a primary driver of post-earnings stock movement. The prior day's market strength was attributed to U.S. President Donald Trump's decision to delay tariffs on the EU, which temporarily calmed trade war fears. Separately, President Trump's renewed call for Canada's annexation, linked to a $61 billion proposal for missile defense system inclusion, introduced a distinct geopolitical headline. In commodity markets, crude oil prices increased, with WTI Futures up 1.7% to $61.91 a barrel and Brent Oil rising 1.4% to $64.44, driven by concerns over potential new sanctions on Russia and ahead of an OPEC+ meeting discussing production levels. Gold Futures traded mutedly, gaining 0.2% to $3,332.84/oz.

Key Decisions for Investors

• Investors should closely monitor NVIDIA's earnings report, focusing on EPS, revenue, gross margin performance against the c.71% benchmark, and CEO Jensen Huang's guidance on China and overall outlook, as these will likely dictate significant near-term stock movement.
• Given the anticipated 6% volatility in NVIDIA's stock post-earnings, consider reviewing exposure to the semiconductor sector and related technology indices, and prepare for potential market reactions.
• Stay attentive to developments concerning potential sanctions on Russia and the upcoming OPEC+ meeting, as these are key drivers for current oil price movements and could impact energy-related investments.
• While easing EU trade tensions provided a temporary lift, acknowledge that geopolitical statements, such as those regarding U.S.-Canada relations, can introduce market uncertainty and should be monitored for potential escalation or policy shifts.