European stocks gain on Nvidia earnings: markets close

(Bloomberg) — European stocks were slated for modest gains as traders await Nvidia Corp.’s results. for clues on the growth momentum of artificial intelligence-related stocks. Asian shares traded in narrow ranges amid weak earnings from Chinese companies.

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Euro Stoxx 50 futures rose 0.1 percent, pointing to a quiet start for shares in the region, while U.S. shares were little changed in Asian trade.

Chinese shares in Hong Kong fell as much as 1.6 percent, while those on the mainland fell to their lowest level since early February. Shares of bottled water maker Nongfu Spring Co. fell as much as 13% after posting their slowest half-year profit growth in four years, becoming the latest company to issue disappointing results.

“So far we’re still seeing a lot more downgrades than upgrades” in Chinese earnings, Winnie Wu, a China equity strategist at Bank of America Corp., told Bloomberg TV. Internet companies are outperforming other sectors in beating earnings expectations, but materials, technology, construction, auto and other industries pose significant downside risks, she said.

Most major Asian benchmarks were in the red, with South Korea and Hong Kong posting losses. Two-year Treasury yields, which are more sensitive to interest rate policy, fell three basis points.

Weak sentiment toward China resurfaced following sluggish outlook guidance earlier this week from e-commerce firm PDD Holdings Inc. the stuttering pace of growth continued through comments from other companies.

ANTA Sports Products Ltd. also cut its full-year sales guidance for one of its core brands on Tuesday amid expectations that it will have to do more discounting to woo shoppers in the country. Meanwhile, Australian company Fortescue Ltd. reported a full-year profit that missed analysts’ forecasts, partly due to slowing iron ore demand from its biggest customer China.

Cnooc Ltd., BYD Co. and Meituan are all set to report on Wednesday. Later in the US, investors will be looking for clues as to whether the artificial intelligence euphoria has more room to run, with the world’s most influential stock today, Nvidia, set to report earnings.

“We’re seeing a weaker showing in Asia today, possibly as Nvidia’s preliminary results tonight could limit risk-taking,” said Jun Rong Yeap, a market strategist at IG Asia Pte.. “Nvidia’s results will be viewed as a watershed moment for global markets given the extreme bullishness of AI’s share price over the past year.”

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The yen extended losses to 0.4 percent against the dollar following comments from Bank of Japan Deputy Governor Ryozo Himino. The BOJ will raise interest rates as long as inflation moves in line with the bank’s view and must monitor developments with the “greatest vigilance,” Himino said.

Shares of Seven & i Holdings Co. fell after convenience store operator 7-Eleven sought a national security designation from authorities, in a move that could raise potential hurdles for a takeover. Its application came after Alimentation Couche-Tard Inc. approached the company last week.

Meanwhile, Japan has issued its highest emergency alert as Typhoon Shanshan heads towards the southern island of Kyushu.

In other Asian corporate developments, shares of HSBC Holdings Plc rose in Hong Kong to beat a benchmark after Bloomberg reported that Europe’s biggest bank is considering plans that could shed layers of middle management.

Berkshire Hathaway Inc. of Warren Buffett sold another $982 million in Bank of America stock, according to a regulatory filing.

Bitcoin fell below the $60,000 level on Wednesday morning as part of a broad pullback in the crypto market that included a sharp drop in the second largest token Ether.

Oil was steady after slipping in the previous session to end a three-day rally. Gold retreated after a three-day advance that brought it closer to an all-time high.

Nvidia earnings

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

Analysts, on average, are predicting that the chipmaker giant will project revenue growth of more than 70% for the current quarter. Some predict even higher growth. Nvidia’s results and forecast will also serve as a barometer for AI spending across much of the tech industry.

Key events this week:

• Nvidia earnings on Wednesday

• The Fed’s Raphael Bostic and Christopher Waller speak on Wednesday

• Eurozone consumer confidence on Thursday

• US GDP, Initial Jobless Claims, Thursday

• The Fed’s Raphael Bostic speaks on Thursday

• Japan Unemployment, CPI Tokyo, Industrial Production, Retail Sales, Friday

• Euro zone CPI, unemployment, Friday

• US personal income, spending, PCE; consumer sentiment on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were little changed as of 2:32 p.m. Tokyo time

• Nasdaq 100 futures fell 0.1%

• Japan’s Topix rose 0.2%

• Australia’s S&P/ASX 200 fell 0.3%

• Hong Kong’s Hang Seng fell 1.1%

• Shanghai Composite fell 0.6%

• Euro Stoxx 50 futures were little changed

Coins

• Bloomberg Dollar Spot Index rose 0.3%

• The euro fell 0.4% to $1.1143

• The Japanese yen fell 0.4 percent to 144.47 per dollar

• The offshore yuan was down 0.2 percent at 7.1357 per dollar

Cryptocurrencies

• Bitcoin fell 3.9% to $59,413.49

• Ether fell 4% to $2,478.98

BONDS

commodities

• West Texas Intermediate crude fell 0.1% to $75.43 a barrel

• Spot gold was down 0.7% at $2,507.33 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Abhishek Vishnoi.

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