Asian shares set to fall as Nvidia disappoints: Markets close

(Bloomberg) — Asian stocks followed their U.S. peers lower after underwhelming earnings from Nvidia Corp . have dimmed the outlook for the technology sector.

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South Korea’s Kospi index fell more than 1 percent as chipmakers Samsung Electronics Co. and SK Hynix Inc. they decreased. Japanese stocks also opened lower. Nasdaq 100 futures fell 1 percent in Asia as Nvidia fell more than 8 percent in after-market trading following a sales forecast that disappointed some on Wall Street.

The prospect threatened to cool an artificial intelligence frenzy that has turned Nvidia into the world’s second most valuable company. The chipmaker is a key beneficiary of a race to upgrade data centers to handle AI software, and its sales forecasts have become a barometer for that spending boom.

“Nvidia’s strong results and guidance failed to impress markets, primarily due to expectations rather than underperformance,” said Charu Chanana, head of currency strategy at Saxo Markets. “This disappointment may permeate the Asian tech space today, but there is no reason to expect any derailment in AI development or for Nvidia to remain a backbone of AI development and deployment.”

The S&P 500 at one point was headed for its worst decline since the August 5 crisis. The gauge pulled away from that threshold, closing up 0.6%. Wall Street’s favorite volatility gauge — the VIX — rose to around 17.

Yields on the 10-year Treasury steadied after rising a basis point to 3.84 percent in the previous session. The dollar was little changed after gaining heavily on speculation investors were buying the US currency to rebalance portfolios.

In Asia, investors will keep a close eye on Chinese shares after the benchmark CSI 300 fell to its lowest level since February on Wednesday amid a flopping economy. UBS Group AG downgraded its forecasts for the nation’s growth for this year and next, citing a deeper-than-expected decline in the housing market.

Chinese companies delivered a mixed set of earnings, though any surprises are unlikely to ease concerns about what has so far been a dismal season for consumer-facing companies. EV giant BYD posted a 33 percent rise in profit, while Li Auto Inc. missed the forecasts. Meituan reported better-than-expected earnings.

Elsewhere, Nippon Steel Corp. plans to invest an additional $1.3 billion at plants operated by United States Steel Corp., as the Japanese company steps up efforts to secure union support for a takeover bid opposed by both President Joe Biden and Donald Trump.

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Bar too high?

While Nvidia’s guidance was disappointing, revenue more than doubled to $30 billion in its fiscal second quarter, which ended July 28. And the Santa Clara, Calif.-based company’s board approved another $50 billion in share buybacks.

Later on Thursday, investors will focus on key US data, including a growth reading, personal consumption and weekly jobless claims, to help firm bets that the Federal Reserve will ease policy quickly this year. Fed Bank of Atlanta President Raphael Bostic said “it may be time to cut,” but he is still looking for additional data to support a rate cut next month.

In commodities, oil steadied after a two-day slide as technical barriers stymied gains from falling U.S. inventories and Libyan production disruptions. Gold recovered some of Wednesday’s loss in early trading.

Key events this week:

• 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 down 0.5% at 9:24 a.m. Tokyo time

• Hang Seng futures fell 0.4%

• Japan’s Topix fell 0.2%

• Australia’s S&P/ASX 200 fell 0.5%

• Euro Stoxx 50 futures fell 0.3%

• Nasdaq 100 futures fell 0.9%

Coins

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1131

• The Japanese yen was little changed at 144.49 per dollar

• The offshore yuan was little changed at 7.1284 per dollar

• The Australian dollar rose 0.1% to $0.6794

Cryptocurrencies

• Bitcoin fell 0.2% to $59,229.56

• Ether was down 0.2% at $2,533.45

BONDS

• The 10-year Treasury yield was little changed at 3.84%

• Japan’s 10-year yield rose one basis point to 0.900%

• Australia’s 10-year yield rose two basis points to 3.95%

commodities

• West Texas Intermediate crude rose 0.1% to $74.61 a barrel

• Spot gold rose 0.4% to $2,515.11 an ounce

This story was produced with the help of Bloomberg Automation.

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