By Tom Westbrook
SINGAPORE (Reuters) – Global stocks neared record highs on Wednesday, with the next move depending on the results of chipmaker Nvidia, which is so popular in the market. At the same time, the pound hit a two-and-a-half-year high as traders speculate that Britain will lag behind the United States in cutting interest rates.
MSCI’s broadest index of Asia-Pacific stocks outside Japan lost 0.4 percent. Japan’s Nikkei fell 0.2 percent.
Oil prices recovered from a recent surge on Middle East tensions as sentiment about Chinese demand returned to the forefront, with Brent crude futures trading just below $80 a barrel. (O/R)
Nvidia’s market value has risen tremendously thanks to its dominance in the computer hardware behind artificial intelligence. Its share price has risen by around 3000% since 2019 and with a market capitalization of $3.2 trillion, a move in the company’s stock impacts the entire market.
Second-quarter revenue is expected to have doubled, but even that is likely to disappoint expectations. Options prices show traders are expecting a swing of nearly 10% – or $300 billion – likely the biggest swing in earnings ever.
The results of the “so-called ‘most important company in the world'” stood between Wall Street and new record highs, noted Capital.com analyst Kyle Rodda, setting the tone for the sector.
“The company’s revenue and sales forecast is a barometer of AI capital spending, which can provide insight into the health of other major technology companies,” he said.
The S&P 500 rose about 0.2 percent overnight and futures in Asia lost 0.1 percent, while Nasdaq 100 futures fell 0.3 percent.
E-commerce stocks stabilized in Hong Kong, where the Hang Seng fell 0.5 percent after suffering a setback earlier in the week due to pessimistic comments from online discount retailer PDD Holdings.
The biggest gainer was China’s largest sporting goods maker Anta, whose shares rose 8.5 percent after better-than-expected earnings and a $1.3 billion share buyback. Shares in Australian gaming company Tabcorp slipped 12 percent, heading for their biggest decline since 2020 after the company wrote down asset prices and said it would miss profit targets due to rising costs.
Debt and currency markets were stable in the Asian session, although the Australian dollar rose about 0.2% to hit its highest since January at $0.6813 after monthly inflation data came in slightly above market expectations.
Globally, a weaker dollar has boosted most other currencies on anticipation of US rate cuts, as markets expect short-term US interest rates, currently above 5.25 percent, to fall the most. The yen traded at 144.32 per dollar.
Interest rate futures are forecasting 100 basis points of U.S. rate cuts this year, and last week Fed Chairman Jerome Powell advocated an early start to rate cuts, saying “the time has come.” The tone contrasts with caution at the Bank of England, which has helped sterling become the best-performing G10 currency, up 4.1% year-to-date.
Overnight, the price reached its highest level in more than two years at $1.3269 and remained near that level on Wednesday. (GBP/)
“Inflation in the UK services sector … remains uncomfortably high,” Jane Foley, chief strategist at Rabobank, said in a note.
“In our view, the BoE will probably cut interest rates only once per quarter in the future,” she said. The Fed, on the other hand, is forecasting four consecutive rate cuts of 25 basis points each between September and January.
Interest rate markets remained stable. Yields on 10-year US Treasury bonds were at 3.83% and two-year bonds at 3.87%, with the gap between the two at its narrowest in almost three weeks.
Heavy selling in New York in the evening sent Bitcoin down 4 percent against the dollar to $59,350. Gold held at $2,517 an ounce.
(Edited by Shri Navaratnam)
