Must read: JD Sports and investors await Nvidia Q2 results

GLOBAL MARKETS 

The CAC 40 is rebounding after Tuesday’s political sell-off, while the FTSE 100 is also in the green. 

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In the UK, the energy regulator Ofgem said that it will lift the energy price cap on bills from October by 2%, equating to an increase of £35 for an average home per month. The annual gas and electricity cost per year for an average household will increase to £1,755. 

US futures are pointing to a flat open with markets in wait and see mode ahead of NVIDIA Corp (NASDAQ:NVDA)’s earnings, which could mark a pivotal moment for jittery markets.

JD SPORTS 

JD Sports Fashion (LSE:JD.) reported second quarter like-for-like sales down 3%, following a 2% drop in the first quarter. It faced tough year-on-year comparables in the UK and Europe after a strong period in 2024 when the men’s Euros 2024 tournament supercharged sales. Sales in North America, which account for 36% of Q2 revenue, dropped by 2.3% but this was an improvement on the previous quarter partly thanks to the deferral of several product launches. JD Sports said there was a good performance in apparel, but footwear was softer. CEO Regis Schultz said “we remain cautious on the trading environment going into H2”. 

Encouragingly, the company said that it doesn’t see any material direct impact of US tariffs, but it is monitoring indirect impacts and the ever-changing tariff landscape by keeping in close contact with brand partners. 

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Trade uncertainty, pressure on consumer finances, rising unemployment and struggles at Nike Inc Class B (NYSE:NKE) are among the headwinds facing JD Sports. Nonetheless, in the face of an unpleasant cocktail of pressures, JD Sports has managed to deliver a pick-up in its US market with an improving sales trajectory which provides a source of optimism for investors. 

Shares are reflecting this glimmer of hope this morning with the stock jumping around 4% to the top of the FTSE 100, helping to reverse some of the losses over the last year. While shares have struggled over a one-year period shedding more than a third, they have been performing better lately with an encouraging uptrend over the past six months.

NVIDIA 

Nvidia gets set to release its second-quarter results after the bell as the final US tech giant to report this season. 

There’s a lot of focus on this earnings report given that it comes off the back of a shaky period for tech stocks. The AI darlings such as Nvidia, Palantir Technologies Inc Ordinary Shares - Class A (NASDAQ:PLTR) and Meta Platforms Inc Class A (NASDAQ:META) have suffered some selling pressure as investors start to question whether the winning streak is running out of steam.

Sam Altman, CEO of OpenAI suggested a bubble could be forming in AI stocks and a report from the Massachusetts Institute of Technology (MIT) said that 95% of organisations are getting zero return on generative AI investments. However, this comes after a strong bull run off the April lows for Nvidia, which rebounded to become the first public company to achieve a market cap of $4 trillion (£2.9 trillion) in July. 

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Most analysts are optimistic going into these results – HSBC, Morgan Stanley, Wedbush, and UBS raised their price targets on the stock lately. With AI front and centre for investors this year, powering market gains, there are high hopes for this report with a top and bottom line beat anticipated for Nvidia by many analysts. But with such lofty expectations comes the risk that any small signs of disappointment could heavily punish the stock price. 

According to Refinitiv, Nvidia is expected to report Q2 earnings per share of $1 on revenues of $46 billion, up from 96 cents and $44.06 billion respectively in the previous quarter. There will be a lot riding on guidance for the rest of the year, with investors looking for reassurances that Nvidia can continue to deliver growth.

China will be another focal point following the resumption of its AI chip sales there after Nvidia agreed to pay the US government 15% of Chinese revenues. Last quarter, Nvidia said it lost out on $2.5 billion because of China export restrictions. Investors will also be paying close attention to its Blackwell business, which made up 70% of Nvidia’s data-centre sales last quarter.