Asian Stocks Struggle Following US Records; Nvidia’s Earnings Awaited

Asian stocks faced mixed reactions after the S&P 500 and Nasdaq 100 reached new records, driven by expectations surrounding Nvidia Corp.’s upcoming earnings. While Japan and South Korea opened lower, Australia’s equity benchmark showed gains, and Hong Kong futures indicated modest increases. US futures remained stable in early Asian trading.

Key Highlights:

US Market Performance:

• The S&P 500 achieved its 24th record this year, and the Nasdaq 100 also posted a new high.
• Nvidia shares rose in anticipation of strong earnings, which are seen as a crucial indicator for the sustainability of the current bull market.

Asian Market Response:

• Japan and South Korea’s markets opened lower.
• Australia’s equity benchmark climbed, indicating positive sentiment.
• Hong Kong futures pointed to small gains.

Nvidia’s Anticipated Earnings:

• Nvidia has experienced a substantial surge, with shares up over 90% this year after more than tripling in 2023.
• Investors are focused on Nvidia’s performance, especially its data-center business, to gauge the sustainability of the tech rally.

Market Sentiment:

• Mark Hackett from Nationwide emphasized the importance of Nvidia’s earnings in assessing the current market trend.
• The Reserve Bank of New Zealand and Bank Indonesia are expected to hold rates steady, while South Korea’s central bank is also likely to maintain its stance.

Treasuries and Currency Markets:

• Treasuries steadied, and the dollar remained little changed following global bond rallies.
• Australian yields were flat early Wednesday.

Commodities:

• Gold, silver, and copper consolidated near recent highs.
• Oil prices slipped after an industry report indicated a rise in stockpiles.

Volatility and Market Expectations:

• Stock investors are bracing for potential volatility, particularly with Nvidia’s earnings report on the horizon.
• Goldman Sachs strategists highlighted increased demand for hedges against sudden market declines.
• The CBOE Volatility Index options data signals higher caution among investors despite historically low levels of the gauge.

Market Optimism:

• Morgan Stanley’s Andrew Slimmon noted that the market could extend gains despite recent highs.
• He pointed out that low expectations for equities and a preference for Treasury bill yields suggest markets are still in the “fear” phase of the cycle.

Conclusion: Asian markets are exhibiting mixed reactions amid record highs in US indices and high expectations for Nvidia’s earnings. While certain regions show gains, others remain cautious, reflecting broader economic uncertainties and investor sentiment. Upcoming central bank decisions and economic reports will further shape market movements.

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