Key points:
Asian shares declined on Thursday, tracking Wall Street futures lower, as Nvidia’s earnings report did not meet the lofty expectations of bullish investors. Although Nvidia’s third-quarter revenue forecast of $32.5 billion exceeded Wall Street estimates, it fell short of the high bar set by those who had fuelled a 180% rally in its shares this year. This led to a 7.6% drop in Nvidia’s stock during after-hours trading, erasing around $236 billion from its market value.
See: Nvidia sees a decline, trading at 126.33 on the VT Markets app.
Picture: Japan’s Nikkei trading at 38478.85 as seen on the VT Markets app.
This negative sentiment spread across Asian markets, particularly affecting tech-heavy indices. The MSCI index of Asia-Pacific shares outside Japan fell by 0.6%, with South Korea’s KOSPI dropping 0.7% and Japan’s Nikkei easing by 0.4%. Taiwan’s TSMC, a key chip contractor for Nvidia, saw its shares decline by 2.4%, contributing to a 1.3% drop in the broader Taiwanese market.
In China, the economic outlook remained cautious as markets faced additional pressure from weaker-than-expected earnings reports. The blue-chip index declined for the fourth consecutive day, down 0.4%, as ongoing concerns about the country’s economic recovery weighed on sentiment. UBS’s recent downgrade of China’s 2024 GDP growth forecast from 4.9% to 4.6% added to the subdued market atmosphere. Chinese battery maker CATL saw its shares fall 2% after U.S. lawmakers proposed adding the company to a restricted list due to alleged ties with Beijing’s military.
In the currency and bond markets, the U.S. dollar steadied after reaching its lowest point in over a year, supported by growing expectations of a Federal Reserve rate cut. Futures markets have priced in a quarter-point rate cut next month, with a 35% probability of a half-point easing. Treasury yields remained mixed, with the two-year and 10-year yield curve nearing a positive inversion—a condition not observed since July 2022, except for a brief period earlier this month.
Gold prices continued to rise, gaining 0.4% to $2,512.89 an ounce, close to their all-time high of $2,531.6. Oil prices also saw a slight recovery after two consecutive sessions of declines, with Brent crude futures inching up 0.1% to $78.75 a barrel and U.S. West Texas Intermediate crude futures up 0.2% to $74.69.
As the trading day progresses, investors will be closely monitoring U.S. weekly jobless claims and inflation data from Germany and Spain. These indicators could provide further insight into the Federal Reserve’s next steps regarding interest rates, potentially setting the tone for global markets in the weeks ahead.
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