Asian stocks: Asian stocks cautious as markets await Nvidia: Markets roundup

Asian stocks opened lower after a slow day financial worldas traders seek Nvidia Corporation.The results offer clues as to whether the artificial intelligence euphoria that has fueled the bull market has further room to grow.

Benchmark stock indexes in Japan and Australia fell on Wednesday, while U.S. equity contracts also declined. With the artificial intelligence giant set to report earnings after Wednesday’s session, weak sentiment toward the market technology sectortriggered by disappointing results earlier this week from Chinese e-commerce firm PDD, may persist.

Investors are bracing for big swings in Nvidia stock after the company reports its $3.2 trillion earnings. Trading in the options market implies a move of nearly 10% in either direction on the day after the results. The stock is up about 160% this year and 1,000% since its October 2022 bear market low.

“We remain optimistic, but risks are now skewed to the downside in the very near term,” Wolfe Research’s Chris Senyek said of markets ahead of a key U.S. payrolls report on Sept. 6. “From a seasonal perspective, we are entering a weaker period that is further amplified in election years.”

Elsewhere, Bitcoin fell below the $60,000 level on Wednesday morning as part of a broader cryptocurrency market pullback that included a sharp drop in the second-largest token, ether. Oil rose after falling on Tuesday to end a three-day rally. The S&P 500 edged up slightly to around $5,625 on Tuesday, while the Nasdaq 100 rose 0.3%. A closely watched gauge of chipmakers added 1.1%. Nvidia Treasuries rose 1.5%. Bonds opened higher in early Asian trading after 10-year yields rose a basis point on Tuesday to 3.82% and a $69 billion sale of two-year bonds was welcomed. Australian bond yields were steady ahead of the country’s monthly inflation data. Federal Reserve Despite economic policies, the state of the economy and the US presidential race, at least one thing seems clear on Wall Street: AI spending remains key.

Concerns about the performance of those investments contributed to a recent sell-off in the tech sector, though that decline was easily exploited. Chip and artificial intelligence hardware companies have led the Nasdaq 100’s rally from its August low, with Nvidia up about 30%.

Nvidia accounts for more than 6% of the S&P 500’s market capitalization in terms of its weight in the index, so “it’s an increasingly important component of the direction the market is trending and the momentum,” Matt Stucky of Northwestern Mutual Wealth Management told Bloomberg Surveillance. If the chipmaking giant misses expectations — or even just meets them — “I think it’s more of a risk-off environment,” he said, “not necessarily fuel for rotation.”

Analysts, on average, predict the chipmaking giant will project revenue growth of more than 70% for the current quarter. Some estimate an even higher increase. Nvidia’s results and forecasts will also serve as a barometer for AI spending across much of the tech industry.

On the economic front, data showed US consumer confidence rose to a six-month high in August as more optimistic views of the economy and inflation offset weakening optimism about the labor market.

While the S&P 500 is now almost back to its all-time high in the wake of Powell’s recent dovish message, underlying risk premiums are still somewhat larger than before the July correction began and the “AI” all-conquering narrative has yet to fully recover, according to Capital Economics’ Jonas Goltermann.

“If the U.S. economy achieves a soft landing, as we continue to anticipate, and enthusiasm around AI picks up further, we forecast the S&P 500 will hit 6,000 by year-end,” he said.