Stocks short of record peaks as Nvidia earnings loom

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Stocks short of record peaks as Nvidia earnings loom

Global stocks were poised near record highs on Wednesday, with the next move riding on results at chipmaking market darling Nvidia, while sterling notched a two-and-a-half year high as traders bet that Britain will lag the US in cutting interest rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.4 per cent. Japan’s Nikkei fell 0.2 per cent.

Oil retraced a recent spike on Middle East tensions as gloom on ******** demand returned to the ***** and Brent crude futures traded just below $US80 ($A118) a barrel.

Nvidia’s market value has ballooned thanks to its dominance of the computing hardware behind artificial intelligence. The stock price is up some 3000 per cent since 2019 and with a market capitalisation of $US3.2 ($A4.7) trillion, a move in its shares affects the entire market.

Second-quarter revenue will likely have doubled, though even that may disappoint expectations. Options pricing shows traders anticipate a near 10 per cent – or $US300 billion ($A442 billion) – swing in market value, likely the largest earnings move of any company, ever.

The results at the “so-called ‘most important company in the world,'” stand between Wall Street and fresh record highs, noted Capital.com analyst Kyle Rodda, and set the tone for the sector.

“The company’s revenue and sales guidance is a barometer of AI capex, with inferences to be drawn about the health of the other mega-cap tech names,” he said.

The S&P 500 went up about 0.2 per cent overnight and futures drifted 0.1 per cent lower in Asia, while Nasdaq 100 futures fell 0.3 per cent.

E-commerce shares stabilised in Hong Kong – where the Hang Seng slipped 0.5 per cent – after taking a kicking following downbeat remarks from discount online retailer PDD Holdings earlier in the week.

China’s biggest sportswear maker, Anta, was the top gainer and shares were up 8.5 per cent after better-than-expected profits and $US1.3 billion ($A1.9 billion) buyback. Shares in *********** gambling company Tabcorp slid 12 per cent and headed for their largest drop since 2020 after the company wrote down asset prices and said rising costs meant it would miss earnings targets.

Debt and currency markets were steady in the Asia session, though the *********** dollar popped up about 0.2 per cent to touch its highest since January at $US0.6813 ($A1.0034) after monthly inflation data was slightly higher than market expectations.

Globally a weakening dollar in anticipation of US rate cuts has lifted most other currencies because markets see US short-term rates, currently above 5.25 per cent, as having furthest to fall. The yen traded at 144.32 per dollar.

Interest rate futures price 100 basis points of US rate cuts this year and last week Fed Chair Jerome Powell endorsed an imminent start to cuts saying “the time has come”. The tone contrasts with caution at the Bank of England, which has helped sterling become the top-performing G10 currency with a 4.1 per cent gain for the year-to-date.

It hit its highest in more than two years overnight at $US1.3269 ($A1.9543) and hovered near that level on Wednesday.

“*** services sector inflation…is still uncomfortably high,” Rabobank senior strategist Jane Foley said in a note.

“In our view, the BoE is likely to only cut rates once a quarter going forward,” she said, against a forecast for four consecutive 25 bp cuts from the Fed from September to January.

Rates markets were steady with 10-year US Treasury yields at 3.83 per cent, two-year yields at 3.87 per cent and the gap between the two its narrowest in nearly three weeks.

Heavy selling in the New York evening drove bitcoin down 4.0 per cent on the dollar to $US59,350 ($A87,412). Gold held at $US2,517 ($A3,707) an ounce.

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