A look at the day ahead in U.S. and global markets from Mike

Dolan

Wall Street's most bizarre reaction to the relatively benign

U.S. employment report on Friday was a late selloff in stellar

Nvidia ( NVDA ) - the artificial intelligence poster child that's almost

doubled in price again this year.

Although many dismissed Nvidia's ( NVDA ) late 5% recoil as

merely overdue profit taking on its latest near-90% surge so far

this year, the stock fell another 1.5% overnight before

recovering that ahead of Monday's bell. And the move stopped

Nvidia ( NVDA ) overtaking Apple as the second most valuable company.

And there's an inevitable search for some smoking gun.

Chipmakers Broadcom and Marvell Technology ( MRVL )

also fell on Friday after their quarterly reports failed to

impress investors.

Hardly a game changer in itself, but Nvidia ( NVDA ) has been sued by

three authors who said it used their copyrighted books without

permission to train its NeMo AI platform.

And in another tech sideswipe on Monday, the European

Union's privacy watchdog said the European Commission's use of

Microsoft ( MSFT ) software breached EU privacy rules and the

bloc's executive also failed to implement adequate safeguards

for personal data transferred to non-EU countries.

Either way, the pullback does come after a wobbly week for

the leading "Magnificent Seven" of megacaps - perhaps indicating

some feeling that they'd all come a little too far too fast.

After hitting record highs earlier in the session, the S&P500

ended down 0.6% on Friday and futures were in the red

again early Monday.

The hiccup was hardly a reflection of the February

employment report - which was another statement on the rude

health of the U.S. economy. New payrolls beat forecasts last

month, but the overall labor market cooled with a rise in the

jobless rate and ebbing of wage growth.

That nailed in June for a first interest rate cut from the

Federal Reserve and saw full-year easing expectations climb to

95 basis points and two-year Treasury yields drop to

the lowest in a month.

And that all sets up Tuesday's consumer price report for

February as the next key moment in the Fed's assessment of the

disinflation path. Headline annual CPI inflation is expected to

remain steady at 3.1% - with the "core" rate ebbing to 3.7% from

3.9% the prior month.

By contrast overseas, China's jarring bout of deflation

appears to have eased somewhat as weekend data showed annual CPI

inflation there for the first time in six months - exceeding

forecasts with a 0.7% advance. And yet downward price pressures

persisted with a deeper 2.7% annual slump in producer prices.

How much the Lunar New Year holiday affected the readouts

remains to be seen, but China's stock benchmarks

advanced 1.2% on Monday nonetheless amid some relief.

China has also asked banks to enhance financing support for

state-backed China Vanke and called on creditors to consider

private debt maturity extension, in a rare intervention from

central government to help an embattled property firm.

In Japan, speculation about a Bank of Japan policy

tightening as soon as this month has intensified over the past

week and fourth-quarter GDP revisions on Monday saw initial

indications of late 2023 recession magiced away.

Although below the latest forecasts, Japan's revised gross

domestic product expanded at an annualised clip of 0.4% in the

October-December period, better than the initial estimate for a

0.4% contraction.

But with the yen pushing one-month highs again on

Monday amid the BOJ concerns, Japan's Nikkei skidded 2%

lower - with chip-equipment maker Tokyo Electron ( TOELF ) losing

3% and chip-testing equipment maker Advantest ( ADTTF ) off

almost 5%.

Elsewhere, the dollar was a touch lower.

But bitcoin hit another record high above $71,000, as

the surge in the token showed no signs of slowing down.

Britain's financial watchdog on Monday became the latest

regulator to pave the way for digital asset trading products

after saying on Monday it will now permit recognised investment

exchanges to launch crypto-backed exchange-traded notes.

Key diary items that may provide direction to U.S. markets later

on Monday:

* New York Fed inflation expectations survey, US Feb employment

trends

* Eurogroup finance ministers meet in Brussels

* U.S. Treasury auctions $56 billion of 3-year notes, and sells

3- and 6-month bills

* U.S. corp earnings: Oracle

(By Mike Dolan, editing by Nick Macfie

[email protected])