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Stocks stop short of record peaks as Nvidia earnings loom
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Stocks stop short of record peaks as Nvidia earnings loom
Aug 29, 2024 9:08 AM

SINGAPORE (Reuters) - Global stocks were poised near record highs on Wednesday, with the next move riding on results at chipmaking market darling Nvidia ( NVDA ), while sterling notched a 2-1/2 year high as traders bet that Britain will lag the U.S. in cutting interest rates.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.4%. Japan's Nikkei fell 0.2%.

Oil retraced a recent spike on Middle East tensions as gloom on Chinese demand returned to the fore and Brent crude futures traded just below $80 a barrel. [O/R]

Nvidia's ( NVDA ) market value has ballooned thanks to its dominance of the computing hardware behind artificial intelligence. The stock price is up some 3000% since 2019 and with a market capitalisation of $3.2 trillion, a move in its shares affects the entire market.

Second-quarter revenue will likely have doubled, though even that may disappoint expectations. Options pricing shows traders anticipate a near 10% - or $300 billion - swing in market value, likely the largest earnings move of any company, ever.

The results at the "so-called 'most important company in the world,'" stand between Wall Street and fresh record highs, noted Capital.com analyst Kyle Rodda, and set the tone for the sector.

"The company's revenue and sales guidance is a barometer of AI capex, with inferences to be drawn about the health of the other mega-cap tech names," he said.

The S&P 500 went up about 0.2% overnight and futures drifted 0.1% lower in Asia, while Nasdaq 100 futures fell 0.3%.

E-commerce shares stabilised in Hong Kong - where the Hang Seng slipped 0.5% - after taking a kicking following downbeat remarks from discount online retailer PDD Holdings earlier in the week.

China's biggest sportswear maker, Anta, was the top gainer and shares were up 8.5% after better-than-expected profits and $1.3 billion buyback. Shares in Australian gambling company Tabcorp slid 12% and headed for their largest drop since 2020 after the company wrote down asset prices and said rising costs meant it would miss earnings targets.

Debt and currency markets were steady in the Asia session, though the Australian dollar popped up about 0.2% to touch its highest since January at $0.6813 after monthly inflation data was slightly higher than market expectations.

Globally a weakening dollar in anticipation of U.S. rate cuts has lifted most other currencies because markets see U.S. short-term rates, currently above 5.25%, as having furthest to fall. The yen traded at 144.32 per dollar.

Interest rate futures price 100 basis points of U.S. rate cuts this year and last week Fed Chair Jerome Powell endorsed an imminent start to cuts saying "the time has come". The tone contrasts with caution at the Bank of England, which has helped sterling become the top-performing G10 currency with a 4.1% gain for the year-to-date.

It hit its highest in more than two years overnight at $1.3269 and hovered near that level on Wednesday. [GBP/]

"UK services sector inflation...is still uncomfortably high," Rabobank senior strategist Jane Foley said in a note.

"In our view, the BoE is likely to only cut rates once a quarter going forward," she said, against a forecast for four consecutive 25 bp cuts from the Fed from September to January.

Rates markets were steady with 10-year U.S. Treasury yields at 3.83%, two-year yields at 3.87% and the gap between the two its narrowest in nearly three weeks.

Heavy selling in the New York evening drove bitcoin down 4% on the dollar to $59,350. Gold held at $2,517 an ounce.

(Editing by Shri Navaratnam)

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