Weekly Market Wrap: Nvidia revived the AI trade, but inflation put rate hikes back in focus

Global equities ended the week higher after Nvidia’s strong outlook revived confidence in AI spending, even as hotter US inflation data and a hawkish message from Federal Reserve Chair Kevin Warsh raised the risk of another rate hike.

The S&P 500 gained 0.5% for the week, and the Nasdaq added 0.9%. Nvidia’s forecast for roughly 70% revenue growth in the next fiscal year reassured investors that demand for AI infrastructure remains strong, lifting technology shares late in the week.

The mood shifted again on Friday. July US PCE inflation rose 3.7% year-on-year, above expectations, while Warsh said the Fed would have “work to do” if inflation did not return to target. Markets raised the implied probability of a September rate increase to about 60%, from roughly 35% before his speech. The US dollar rallied, gold fell more than 3% and global shares gave back part of their post-Nvidia gains.

Australian shares still finished the week 0.37% higher at 9,092.3. Technology shares led Friday’s move, with Dicker Data surging after stronger earnings tied to AI infrastructure demand, while July CPI slowed to 3.5% from 3.8% in June but remained above forecasts and the RBA’s 2–3% target range.

Nvidia’s results cleared the market’s high bar. Its outlook pointed to continued strong demand for AI chips and data-centre equipment, helping ease concern that hyperscaler spending was beginning to slow.

That was important for more than one company. Nvidia’s guidance feeds into expectations for the semiconductor, memory, networking and cloud-computing businesses that have driven much of this year’s global equity rally.

However, the inflation data quickly changed the broader market calculation. A stronger-than-expected PCE reading made it harder for investors to assume that the Fed’s next move will be lower rates.

Warsh’s Jackson Hole comments reinforced that point. Short-dated Treasury yields and the US dollar rose as traders increased rate-hike expectations, showing that strong AI earnings alone may not be enough to keep technology valuations rising if inflation remains sticky.

The ASX 200 finished higher for the week, supported by a late rebound in technology stocks. Dicker Data rose more than 20% on Friday after reporting a 37% lift in first-half earnings, with AI infrastructure and software demand supporting the result.

The gains were far from broad-based. PEXA fell sharply after softer guidance linked to slower home sales, while Harvey Norman and Domino’s also came under pressure after their results. That dispersion has become a defining feature of the local reporting season: investors are rewarding companies that can deliver earnings upgrades and punishing those facing weaker consumer demand or slowing transaction activity.

July’s 3.5% annual CPI result adds another layer. Inflation has eased from June, which is constructive for rate-sensitive parts of the ASX, but it remains above the RBA’s target range and came in above market expectations.

Australian GDP data next week will provide the next major domestic read on whether the economy is slowing enough to ease inflation pressure without creating a more serious growth problem.

Brent crude fell more than 5% for the week, ending near US$89 a barrel. Reports that oil flows through the Strait of Hormuz may be improving reduced the immediate concern over supply disruption, while higher US rate expectations added pressure to the broader commodity complex. 

The reversal does not remove the geopolitical risk. Tanker traffic remains below normal levels and negotiations remain uncertain. That leaves oil exposed to sharp moves in either direction:

• Further disruption to shipping or exports could rebuild the supply premium quickly.

• Evidence that flows are normalising could push Brent lower again.

• A sustained fall in oil would ease one source of global inflation pressure, while a renewed surge could make central banks even more cautious.

Gold showed the other side of the rate story. The metal fell more than 3% on Friday to around US$4,567 an ounce after Warsh’s comments lifted the US dollar and rate-hike expectations. 

Contracts for Difference (CFDs) allow traders to take a long view if renewed disruption supports crude or geopolitical risk revives demand for gold, or a short view if Hormuz flows improve and the US dollar strengthens. Stop-loss, take-profit and pending orders can help define risk around fast-moving policy and geopolitical headlines.

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ASX 200: Can growth data support the local rally?

The ASX enters September close to recent highs, though the reporting season has revealed clear winners and losers. Wednesday’s GDP figures will be the next major local catalyst after July CPI came in above expectations.

A resilient growth result alongside easing inflation pressure could support banks, retailers and real estate stocks. Weaker growth, or evidence that inflation is proving harder to contain, could renew pressure on rate-sensitive sectors.

US Tech 100: Can AI momentum survive higher-rate expectations?

Nvidia’s forecast restored confidence in the AI trade, but the US Tech 100 now faces a tougher macro backdrop. This week’s US manufacturing, services and jobs data will shape expectations for the Fed’s September decision.

Strong economic data may support earnings expectations but could also lift yields further. A softer employment report could reduce rate pressure, though investors will also be watching for signs of a sharper economic slowdown.

Brent crude: Are Hormuz flows finally improving?

Brent’s weekly fall has shifted attention from disruption risk to the pace of any shipping recovery. Traders will watch tanker traffic, diplomatic developments and further sanctions headlines.

A durable improvement in flows could extend the retreat from recent highs. A setback in negotiations or another shipping incident could quickly put the geopolitical premium back into the market.

The week ahead will test whether Nvidia’s results can keep the AI rally intact as markets reassess inflation and interest-rate risk. For Australian traders, local growth data, US payrolls and the direction of oil remain the clearest cross-market catalysts.

This week showed how quickly leadership can change. Nvidia lifted technology shares, the Australian reporting season created large stock-specific moves, and a hawkish Fed message pushed the US dollar higher while oil and gold reversed.

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