Nasdaq 100 Gyrates as NVDA Rises After Earnings

Also, 30-year T-bond, gold, natural gas and euro futures

1. Nasdaq 100 E-mini futures (/NQ): -0.41% 
2. 30-year T-bond futures (/ZB): +0.24% 
3. Gold futures (/GC): +0.8% 
4. Natural gas futures (/NG): +5.92% 
5. Euro futures (/6E): -0.18% 

U.S. equity market futures traded higher through overnight hours before coming back down to earth as soon as the cash equity bell rang today in New York. Traders are grappling with the implications of the Nvidia (NVDA) earnings report, which briefly pushed the shares to fresh all-time highs at the open. Elsewhere, amid continued strength in the labor market, U.S. Treasury yields are continuing their chop. Metals are mixed, while attention in commodities remains on natural gas, which has surged this week as tensions in Eastern Europe percolate. The U.S. dollar is mixed, with the Japanese yen leading and the euro lagging.

The Nasdaq 100 (/NQZ4) had traded back to highs not seen since last Friday in the wake of the NVDA and Snowflake (SNOW) earnings reports but sell orders at the open have since seen all overnight gains lost. Nevertheless, both earnings reports point to ongoing momentum for the AI narrative, and volatility has dropped (in both spot VIX and in /VX futures) over the past 24 hours. Market liquidity may soon begin to thin out as traders de-risk ahead of next week’s holiday trading schedule.

Weekly U.S. jobless claims fell to their lowest level since April, underscoring the Federal Reserve’s ongoing shift away from a dovish stance and toward neutrality; discussions around ending the rate cut cycle sometime in 2025 are already taking place. Dissent among members of the Federal Open Market Committee (FOMC) likewise indicates a more deliberate pace of cuts moving forward: Three-Month SOFR rates (/SR3Z4) are discounting a mere 54% chance of a 25-basis-point (bps) rate cut in December. The long-end of the curve is seeing strength in the wake of yesterday’s 20-year bond auction. 

Metals are mixed again although all eyes are on gold prices (/GCZ4), which have retraced half of their losses since the start of November. Gold volatility has likewise been rising, which has been a reliable indicator of positive momentum throughout 2024. Elsewhere, copper prices (/HGZ4) continue to struggle to rebuild momentum as concern about Chinese growth persists in the face of the threat of a new phase of the U.S.-China trade war. 

Surging European natural gas prices are spilling over across the pond. American natural gas prices (/NGF5) have flirted with a gain of nearly 20% this week alone as echoes of 2022 ring through markets: ratcheting tensions between Russia-Ukraine harken a disruption of energy supplies as winter looms. A squeeze in natural gas prices akin to what happened in 2022 is a low probability, but it’s a non-zero possibility that can’t be dismissed. 

Both the British pound (/6BZ4) and the euro (/6EZ4) are struggling today bvs. the U.S. dollar in an environment that is shaping up like what transpired in summer 2022: rapidly increasing European natural gas prices darkened the economic outlook and led to a crippling wave of inflation. Beset by already-weak growth, another surge in European energy prices could bring about stagflation to both the Eurozone and the U.K. 

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

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