Asian stocks tumble on Nvidia earnings

Asian shares dropped on Thursday, following a dip in Wall Street futures, as Nvidia’s latest financial results left some bullish investors underwhelmed. Meanwhile, the dollar steadied, and the Treasury yield curve edged closer to turning positive.

Investors are now turning their attention to upcoming US weekly jobless claims and inflation data from Germany and Spain, seeking clues on the Fed’s future interest rate decisions, particularly the prospects of rate cuts beyond September.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.6 per cent, weighed down by a decline in tech stocks. Japan’s Nikkei fell 0.4 per cent, while South Korea’s KOSPI slipped 0.7 per cent.

Nvidia’s third-quarter revenue forecast of $32.5 billion surpassed Wall Street estimates.

However, the results failed to satisfy the most optimistic investors who have fueled a substantial rally in the company’s stock. Nvidia shares plummeted 7.6 per cent in after-hours trading, erasing approximately $236 billion in market value.

As a result, Nasdaq futures fell by one per cent in early Asian trading, while S&P futures declined by 0.5 per cent. Nvidia’s chip contractor, TSMC, saw its shares slide 2.4 per cent, dragging the broader Taiwanese market down by 1.3 per cent.

China’s blue-chip index fell 0.4 per cent for the fourth consecutive day, as disappointing results from Chinese companies highlighted the country’s fragile economic recovery.

The dollar steadied above more than one-year lows, weighed down by expectations of imminent Fed rate cuts. Futures markets have fully priced in a quarter-point cut next month, with a 35 per cent probability of a half-point easing.

The euro held at $1.113, having dropped 0.6 per cent overnight and failing to break major resistance at $1.12.

Treasury yields were mixed overnight, but the inverted yield curve between two-year and 10-year notes continued to steepen, nearing a positive turn for the first time since July 2022, except for a brief un-inversion during the market crash earlier this month.

Two-year yields held at 3.8692 per cent, down four basis points overnight, while 10-year yields remained largely unchanged at 3.8368 per cent, just three basis points below the two-year yields.

Gold prices climbed 0.4 per cent to $2,512.89 an ounce, approaching a new peak, just shy of its record high of $2,531.60.

In the oil markets, prices edged higher after two consecutive sessions of declines, as concerns about demand from China and the US were balanced by supply disruptions in Libya.

Brent crude futures rose 0.1 per cent to $78.75 a barrel, while US West Texas Intermediate crude futures gained 0.2% to $74.69. Despite these gains, both benchmarks have fallen over three per cent in the past two days.

Attribution: Reuters

 

Subediting: M. S. Salama