Asian stocks fell after a tech-led retreat on Wall Street, with all eyes on Nvidia Corp.’s earnings due later Wednesday and the impact of China’s latest market support measures.
Shares dropped from Japan to South Korea and Australia, with Hong Kong equity futures declining as well. The region’s weak tone came after the Nasdaq 100 fell almost 1% and the S&P 500 slid below 5,000. Nvidia sank more than 4% in the run-up to its results later Wednesday, where traders will be looking for confirmation the chipmaker can meet the lofty expectations set by the artificial-intelligence boom.
The focus is also on Chinese stocks after the country’s two main bourses froze the accounts of a major quantitative hedge fund for three days after the money manager dumped a large amount of shares within a minute Monday. Meantime, banks also ramped up funding help for the troubled property sector.
“The company’s results have become the biggest of the reporting period, acting as both a macroeconomic barometer and the proverbial canary in the coal mine for the artificial intelligence boom,” said Kyle Rodda, senior market analyst at Capital.Com Inc., referring to Nvidia. “The bar for an upside surprise is set high,” with its valuation at eye-watering levels, he said.
The dollar steadied and Treasury 10-year yields were little changed in Asian trading, while persistent bearishness around the outlook for China’s steel demand pushed iron ore to a three-month low.
In Japan, recent loss of momentum has pulled the Nikkei 225 further away from reaching its highest-ever close of 38,915.87 in 1989. Still, macro and stock hedge funds are betting on Japan this year, predicting the central bank will shift its policy after eight years of negative interest rates. The yen steadied slightly below 150 per dollar as the nation’s exports rose more than expected in January.
Nvidia Nerves
The ongoing earnings season has so far reaffirmed the view that Corporate America is holding up well, although the reporting period has been mixed for the “Magnificent Seven” megacaps. Among other highlights from the US session, Walmart Inc. climbed after reporting strong earnings while Palo Alto Networks Inc. tumbled in late trading after cutting its revenue forecast for the year.
Ahead of Nvidia’s numbers, some traders decided to lock in profits — with the market also weighing a report that Microsoft Corp. is developing a networking card as an alternative to the one supplied by the chipmaker.
The artificial-intelligence frenzy has boosted stocks that have been linked to the technology, and Nvidia is one of the few firms to have demonstrated significant revenue growth from AI.
The Fed’s January meeting minutes are also due on Wednesday, offering traders more clues about where policymakers stand on a rate-cut timeline. Faster-than-expected inflation last week fueled concerns the Fed may not begin cutting interest rates as soon — or by as much — as market participants previously expected this year.
In commodities, oil steadied as investors juggled signs of tighter supplies with elevated tensions in the Middle East and a still-shaky demand outlook. Elsewhere, gold was little changed after four sessions of gains.
Key Events This Week:
- Eurozone consumer confidence, Wednesday
- Nvidia, HSBC earnings, Wednesday
- Federal Reserve releases minutes from its January meeting, Wednesday
- Atlanta Fed President Raphael Bostic speaks, Wednesday
- Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, CPI, Thursday
- US initial jobless claims, US existing home sales, Thursday
- ECB issues account of January meeting, Thursday
- Fed Governor Lisa Cook and Minneapolis Fed President Neel Kashkari speak, Thursday
- China property prices, Friday
- Germany IFO business climate, GDP, Friday
- ECB publishes 1- and 3-Year inflation expectations survey, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 10:13 a.m. Tokyo time
- Hang Seng futures fell 0.4%
- Nikkei 225 futures (OSE) fell 0.5%
- Japan’s Topix fell 0.2%
- Australia’s S&P/ASX 200 fell 0.7%
- Euro Stoxx 50 futures fell 0.1%
- Nasdaq 100 futures fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0807
- The Japanese yen was little changed at 150.05 per dollar
- The offshore yuan was little changed at 7.2050 per dollar
- The Australian dollar was little changed at $0.6551
Cryptocurrencies
- Bitcoin rose 0.5% to $52,275.21
- Ether rose 0.5% to $3,003.76
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.29%
- Japan’s 10-year yield was unchanged at 0.725%
- Australia’s 10-year yield was little changed at 4.19%
Commodities
- West Texas Intermediate crude rose 0.1% to $77.12 a barrel
- Spot gold was little changed
Source: Bloomberg
