(Bloomberg) — Asian stocks slipped after the S&P 500 crept to another record ahead of results from chipmaker Nvidia Corp. that traders see as a gauge for the sustainability of the bull market.
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Shares in Japan and South Korea opened lower, while Australia’s equity benchmark climbed. Futures in Hong Kong pointed to small gains. The S&P 500 saw its 24th record this year and the Nasdaq 100 also posted a high as Nvidia edged up ahead of earnings due later today. US futures were little changed in early Asia trading.
The bar is high for Santa Clara, California-based Nvidia — whose shares have soared over 90% this year after more than tripling in 2023. Investors are waiting to see whether the poster child of artificial intelligence will be able to match the sky-high expectations surrounding the technology. The company’s revenue is expected to be buoyed by soaring demand in its data-center business.
“With markets trending upward and emotions in check, Nvidia’s performance will be pivotal in gauging the sustainability of the current market run and the potential for a more inclusive market rally,” said Mark Hackett at Nationwide.
The Reserve Bank of New Zealand and Bank indonesia are set to hold rates steady on Wednesday, while the minutes of the Federal Reserve’s latest meeting will also be released later in the day. The central bank in South Korea is expected to stand pat on Thursday.
Treasuries steadied and the dollar was little changed after global bonds rallied on the latest sign that developed nations are finally getting a grip on inflation as Federal Reserve Governor Christopher Waller said the recent report on US price pressures was “a reassuring signal.” Australian yields were flat early on Wednesday.
Trading in Asia will likely be quieter with Singapore closed for a holiday. Gold, silver and copper consolidated near recent highs, while oil slipped after an industry report showed a jump in stockpiles.
Volatility Awaits
Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs Group Inc. strategists.
The bank’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote.
The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.
For Morgan Stanley’s Andrew Slimmon, there’s still plenty of room for the market to extend its gains from all-time highs.
Low expectations for equities and the preference for a 5% to 6% yield from Treasury bills suggests that markets are still in the “fear” part of the current cycle, the senior portfolio manager at the bank’s investment management arm said Tuesday.
Key events this week:
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US existing home sales, Wednesday
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Fed minutes, Wednesday
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Nvidia earnings, Wednesday
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Eurozone S&P Global services and manufacturing PMIs, consumer confidence, Thursday
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G-7 finance meeting, May 23-25
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US new home sales, initial jobless claims, Thursday
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Fed’s Raphael Bostic speaks, Thursday
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US durable goods, consumer sentiment, Friday
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Fed’s Christopher Waller speaks, Friday
Stocks
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S&P 500 futures were little changed as of 9:13 a.m. Tokyo time
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Hang Seng futures were little changed
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Japan’s Topix fell 0.4%
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Australia’s S&P/ASX 200 rose 0.1%
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Euro Stoxx 50 futures fell 0.4%
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Nasdaq 100 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0857
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The Japanese yen was little changed at 156.19 per dollar
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The offshore yuan was little changed at 7.2471 per dollar
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The Australian dollar was little changed at $0.6669
Cryptocurrencies
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Bitcoin rose 0.6% to $70,104.88
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Ether rose 1.1% to $3,785.39
Bonds
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The yield on 10-year Treasuries was unchanged at 4.41%
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Japan’s 10-year yield was little changed at 0.980%
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Australia’s 10-year yield was little changed at 4.25%
Commodities
This story was produced with the assistance of Bloomberg Automation.
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