(Bloomberg) — European shares were set for modest gains as traders await results from Nvidia Corp. for signals about the growth momentum in stocks linked to artificial intelligence. Asian shares traded in narrow ranges amid weak corporate earnings in China.
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Euro Stoxx 50 futures rose 0.1%, pointing to a subdued start for equities in the region, while contracts for US equities were little changed in Asian trading.
Chinese shares in Hong Kong fell as much as 1.6%, while those on the mainland fell to their lowest since early February. Shares in bottled water maker Nongfu Spring Co. fell as much as 13% after posting its slowest half-year profit growth in four years, becoming the latest company to report disappointing results.
“So far, we’re still seeing a lot 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, technology, construction, autos and other industries pose significant downside risks, she said.
Most major benchmarks in Asia were in the red, with losses in South Korea and Hong Kong. Yields on two-year government bonds, which are more sensitive to interest rate policy, fell three basis points.
Weak sentiment toward China resurfaced after e-commerce company PDD Holdings Inc.’s sluggish outlook earlier this week. The drumbeat of faltering growth has continued in commentary from other companies.
ANTA Sports Products Ltd. also cut its full-year sales forecast for one of its core brands on Tuesday, amid expectations it would have to offer more discounts to lure buyers in the country. Meanwhile, Australia’s Fortescue Ltd. reported a full-year profit that missed analysts’ forecasts, partly due to a slowdown in demand for iron from its biggest customer, China.
Cnooc Ltd., BYD Co. and Meituan are all scheduled to report on Wednesday. Later in the U.S., investors will be looking for clues as to whether the euphoria surrounding artificial intelligence can build further, as the world’s most influential stock, Nvidia, is scheduled to report earnings.
“We see a weaker performance in Asia today, possibly as the run-up to Nvidia’s results tonight may limit risk-taking,” said Jun Rong Yeap, a market strategist at IG Asia Pte., “Nvidia’s results will be seen as a make-or-break moment for global markets given the extreme optimism around AI stocks over the past year.”
The yen extended its losses to 0.4% against the dollar, following comments from Bank of Japan Deputy Governor Ryozo Himino. The BOJ will raise interest rates as long as inflation moves in line with the bank’s view, and must monitor developments with “extreme vigilance,” Himino said.
Shares of Seven & i Holdings Co. fell after the operator of 7-Eleven stores filed for a national security-related designation from authorities in a move that could pose potential obstacles to a takeover. The filing came after Alimentation Couche-Tard Inc. approached the company last week.
Meanwhile, Japan has declared a state of emergency as Typhoon Shanshan heads towards the southern island of Kyushu.
Other developments in Asian companies included a rise in shares of HSBC Holdings Plc in Hong Kong, outperforming the benchmark. Bloomberg reported that Europe’s largest bank is considering plans to cut layers of middle management.
Warren Buffett’s Berkshire Hathaway Inc. has sold another $982 million worth of Bank of America shares, according to a regulatory filing.
Bitcoin fell below $60,000 on Wednesday morning as part of a broad pullback across the crypto market that also saw the second-largest token, Ether, fall sharply.
Oil was steady after falling in the previous session to end a three-day rally. Gold fell after a three-day rise that took it closer to its all-time high.
Nvidia revenue
Investors are bracing for big swings in Nvidia’s stock following the company’s $3.2 trillion earnings report. Options trading is implying a move of nearly 10% in either direction on the day after the results. The stock is up about 160% this year and 1,000% from its October 2022 bear market low.
Analysts on average predict that the giant chipmaker will forecast revenue growth of more than 70% for the current quarter. Some estimate an even higher increase. Nvidia’s results and outlook will also serve as a barometer for AI spending across much of the technology sector.
Important events this week:
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Nvidia Earnings, Wednesday
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Fed’s Raphael Bostic and Christopher Waller to speak Wednesday
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Eurozone consumer confidence, Thursday
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US GDP, Initial Jobless Claims, Thursday
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Fed’s Raphael Bostic to speak Thursday
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
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Eurozone CPI, unemployment, Friday
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US Personal Income, Spending, PCE; Consumer Confidence, Friday
Some of the major moves in the markets:
Shares
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S&P 500 futures were little changed at 2:32 p.m. (Tokyo time)
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Nasdaq 100 futures fell 0.1%
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Japan’s Topix rose 0.2%
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Australia’s S&P/ASX 200 fell 0.3%
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Hong Kong’s Hang Seng fell 1.1%
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The Shanghai Composite fell 0.6%
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Euro Stoxx 50 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index rose 0.3%
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The euro fell 0.4% to $1.1143
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The Japanese yen fell 0.4% to 144.47 per dollar
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The offshore yuan fell 0.2% to 7.1357 per dollar
Cryptocurrency
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Bitcoin fell 3.9% to $59,413.49
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Ether fell 4% to $2,478.98
Bonds
Raw materials
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West Texas Intermediate crude oil fell 0.1% to $75.43 a barrel
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Spot gold fell 0.7% to $2,507.33 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Abhishek Vishnoi.
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