(Bloomberg) — European stocks were set for modest gains as traders await Nvidia Corp.’s results for cues on the growth momentum of artificial-intelligence related stocks. Asian equities traded within narrow ranges amid weak corporate earnings in China.
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Euro Stoxx 50 futures rose 0.1%, indicating a muted start for the shares in the region, while contracts for US stocks were little changed in Asian trading.
Chinese stocks in Hong Kong fell as much as 1.6%, while those in the mainland declined to their lowest since early February. Bottled water maker Nongfu Spring Co. shares plunged as much as 13% after posting the slowest half-year profit growth in four years, becoming the latest company to issue disappointing results.
“So far we are still seeing much more downgrades than upgrades” in Chinese earnings, Winnie Wu, a China equity strategist at Bank of America Corp., told Bloomberg TV. Internet companies are outperforming other sectors in beating earnings expectations, but materials, tech, builders, auto and other industries pose significant downside risks, she said.
Most major benchmarks in Asia were in the red, with South Korea and Hong Kong seeing losses. Two-year Treasury yields, which are more sensitive to interest-rate policy, fell three basis points.
Weak sentiment toward China reemerged following sluggish outlook guidance earlier this week from e-commerce firm PDD Holdings Inc. The drum beat of stuttering growth has continued through the commentary of other companies.
ANTA Sports Products Ltd. on Tuesday also lowered its full-year sales guidance for one of its core brands amid expectations that it would need to hand out more discounts to woo buyers in the country. Meanwhile, Australia’s Fortescue Ltd. reported full-year profit that missed analyst forecasts, partly due to a slowdown in iron demand from biggest customer China.
Cnooc Ltd., BYD Co. and Meituan are all set to report on Wednesday. Later in the US, investors will be looking for any clues on whether the artificial-intelligence euphoria has more room to run, with the world’s currently most influential stock, Nvidia, set to report earnings.
“We are seeing a weaker showing in Asia today, potentially as the lead-up to Nvidia’s results tonight may limit risk-taking,” Jun Rong Yeap, a market strategist with IG Asia Pte., said. “Nvidia’s results will be looked upon as a make-or-break moment for global markets, given the extreme optimism priced around AI stocks over the past year.”
Story continues
The yen extended losses to 0.4% against the dollar, following comments from Bank of Japan’s Deputy Governor Ryozo Himino. The BOJ will raise interest rates as long as inflation moves in line with the bank’s view, and it must monitor developments with “utmost vigilance,” Himino said.
Seven & i Holdings Co. shares slipped after the operator of 7-Eleven stores sought a national security-related designation from authorities in a move that may raise potential hurdles for a takeover. Its application came after Alimentation Couche-Tard Inc. approached the company last week.
Meanwhile, Japan issued its highest emergency alert as Typhoon Shanshan barrels toward the southern island of Kyushu.
In other Asian corporate developments, HSBC Holdings Plc’s shares rose in Hong Kong to outperform the benchmark, after Bloomberg reported that Europe’s largest bank is considering plans that could remove layers of middle management.
Warren Buffett’s Berkshire Hathaway Inc. sold an additional $982 million in Bank of America shares, according to a regulatory filing.
Bitcoin fell below the $60,000 level early Wednesday as part of a broad crypto market retreat that included a sharp drop in second-largest token Ether.
Oil was steady after sliding in the previous session to end a three-day rally. Gold retreated after a three-day advance that’s taken it closer to its all-time high.
Nvidia Earnings
Investors are gearing up for big swings in Nvidia’s shares after the $3.2 trillion company reports. Trading in the options market implies a nearly 10% move in either direction on the day following the results. The stock has rallied about 160% this year and 1,000% from its October 2022 bear-market low.
Analysts, on average, are predicting that the giant chipmaker will project revenue growth of more than 70% for the current quarter. Some are estimating an even larger surge. Nvidia’s results and forecast also will serve as a barometer for AI spending across much of the technology industry.
Key events this week:
Nvidia earnings, Wednesday
Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
Eurozone consumer confidence, Thursday
US GDP, initial jobless claims, Thursday
Fed’s Raphael Bostic speaks, Thursday
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
Eurozone CPI, unemployment, Friday
US personal income, spending, PCE; consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 2:32 p.m. Tokyo time
Nasdaq 100 futures fell 0.1%
Japan’s Topix rose 0.2%
Australia’s S&P/ASX 200 fell 0.3%
Hong Kong’s Hang Seng fell 1.1%
The Shanghai Composite fell 0.6%
Euro Stoxx 50 futures were little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.4% to $1.1143
The Japanese yen fell 0.4% to 144.47 per dollar
The offshore yuan fell 0.2% to 7.1357 per dollar
Cryptocurrencies
Bitcoin fell 3.9% to $59,413.49
Ether fell 4% to $2,478.98
Bonds
Commodities
West Texas Intermediate crude fell 0.1% to $75.43 a barrel
Spot gold fell 0.7% to $2,507.33 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi.
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