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Tepid gains for Asian stocks as U.S. futures fall

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Nvidia's ( NVDA ) shares retreat as investors assess earnings,

China

outlook

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Bank of Korea holds rates as expected

By Gregor Stuart Hunter

SINGAPORE, Aug 28 (Reuters) - Asian stocks wobbled on

Thursday as blowout earnings from artificial intelligence

bellwether Nvidia ( NVDA ) were offset by worries over the

outlook for its China business, while the dollar remained shaky

as investors bet on a near-term rate cut.

MSCI's broadest index of Asia-Pacific shares outside Japan

swung between gains and losses, and was last

down 0.2%, as U.S. equity futures were dragged lower by

after-hours decline in shares of the chip designer, which has

become the world's most valuable company.

"After such a strong run, investor exposure was stretched,

leaving little margin for disappointment," said Charu Chanana,

chief investment strategist at Saxo in Singapore.

"We should expect some spillover," she added, even though it

is unlikely to hurt wider investor confidence.

"Asian chipmakers - especially in Korea and Taiwan - are the

cleanest beta to Nvidia ( NVDA ) and will likely feel the drag."

Following a two-day string of gains that has pushed U.S.

markets to a fresh record, S&P 500 e-mini futures fell

0.2% and Nasdaq futures tumbled 0.4% after Nvidia's ( NVDA )

results.

Investor concerns about Nvidia ( NVDA ) centred on its China

business, which hung in the balance, caught up in the trade war

between Washington and Beijing.

"We expect the stock to trade down modestly following an

in-line quarter and guidance against a backdrop of elevated

expectations heading into the call," analysts from Goldman Sachs

wrote in a research report. "Management noted that it did not

ship any H20 products to China in the quarter."

Japanese stocks fluctuated between gains and losses after

Kyodo news agency reported on Thursday that Japan's top trade

negotiator Ryosei Akazawa cancelled a planned visit to the

United States, where he was expected to iron out details of the

trade deal agreed last month. The Nikkei 225 was last up

0.4%.

Korean stocks advanced 0.3% after the Bank of Korea kept

rates on hold at 2.5%, as widely expected by economists.

Hong Kong stocks slumped, with the Hang Seng Index

falling 1%, led by a 9.7% decline in Meituan ( MPNGF ) shares,

after the Chinese food delivery giant reported a drop in

second-quarter profit on Wednesday.

In the currency markets, the dollar was on the defensive as

traders ramp up bets of an interest rate cut next month,

following Federal Reserve Chair Jerome Powell's recent dovish

pivot and as President Donald Trump moves to assert control of

the world's biggest central bank.

Earlier this week, Trump said he is firing Federal Reserve

Governor Lisa Cook, leaving some investors worried about the

Fed's independence. Cook's lawyer said she will file a lawsuit

against the White House.

Trump pressured the Fed to lower interest rates during his

first term in the White House and he has escalated that campaign

in recent months while seeking to make appointments to key

positions on the U.S. central bank. The president has demanded

that rates be cut by several percentage points and threatened to

fire Powell, although he recently backed down from that.

The yield on benchmark 10-year Treasury notes

fell to 4.2362% compared with its U.S. close of 4.238% on

Wednesday.

The market is currently pricing a 88.7% probability of a

25-basis point rate cut at Fed's policy meeting on 17 September,

up from 61.9% a month ago, according to the CME Group's FedWatch

tool.

The dollar dropped 0.1% against the yen to 147.275

, while the European single currency was up

0.1% on the day at $1.16475, seeking to extend a three-week

winning streak that bumped up its gains this month to 2.02%.

In commodities markets, Brent crude fell 0.5% to

$67.74 per barrel.

Gold was slightly lower. Spot gold was traded down

0.2% at $3391.60 per troy ounce.