(Bloomberg) — Asian shares fell as Big Tech pulled down U.S. shares, shifting attention from the Federal Reserve’s policy outlook to Nvidia Inc.’s earnings release later this week.
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Markets in Hong Kong and mainland China opened lower following weakness in the South Korean and Australian stock markets. In Asia, U.S. stock futures fell as some of the world’s biggest tech names dragged Wall Street down.
The drop came after the “Magnificent Seven” index of large stocks fell 1.2% on Monday. The U.S. stock index fell slightly while more than half of the stocks in the S&P 500 rose, a result of weakness in the tech giants that make up the majority of the index.
Asian government bonds were broadly stable after the 10-year Treasury yield rose 2 basis points to 3.82 percent on Monday. The dollar was flat.
Anticipation is high for Nvidia’s earnings report on Wednesday, with analysts expecting it to again beat consensus estimates by a wide margin and the company may raise its profit guidance. The results could provide more clarity about artificial intelligence demand for Nvidia, a direct beneficiary of intensive spending by companies building AI infrastructure.
“Now it’s Jensen Huang’s turn to move the markets after Powell,” said Anthony Sagrimbene of Ameriprise, referring to Nvidia’s CEO. “In our view, Nvidia’s earnings report this week could have a bigger impact on the broader market than Powell’s Jackson Hole speech last week.”
Chinese consumers are back in the spotlight after shares of PDD Holdings Inc. fell the most since 2022 on the New York market.The system owner’s warning of sluggish sales was the latest disappointment from the sector, where the country’s biggest consumer companies have reported sales misses.
China, the world’s second-largest economy, is seeing bright spots in the manufacturing sector, with industrial profits at major Chinese companies rising 4.1 percent in July from a year earlier.
China also called on Canada to immediately correct its “wrong practice” of imposing new tariffs on the Asian nation.Canada, an export-driven economy heavily reliant on trade with the U.S., is closely watching the Biden administration’s efforts to erect a wall of much higher tariffs on Chinese products such as electric vehicles, batteries, solar cells and steel.
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U.S. inflation data due this week is likely to provide confirmation that a much-needed interest rate cut is imminent, while consumer spending data is likely to signal that central banks are succeeding in keeping the economy expanding.
Economists expect the personal consumption expenditures price index, which excludes food and energy and is the Fed’s preferred gauge of underlying inflation, to rise 0.2% for the second straight month in July, which would slow the three-month annual rate of so-called core inflation to 2.1%, just above the central bank’s 2% target.
San Francisco Fed President Mary Daly said it would be appropriate to start cutting interest rates, while Richmond Fed President Thomas Barkin said he supported rate cuts but that risks to higher inflation remained.
“With Powell’s decision to cut rates in September at Jackson Hole, our wider cut/continued rotation thesis remains intact,” said Orson Kwon at Bank of America. “But don’t discount the gains from Nvidia, which has consistently driven S&P returns and remains a risk to the market if it disappoints.”
In corporate news, LG Electronics is considering an initial public offering for its India unit, hoping to take advantage of a booming stock market to help it reach its goal of boosting its electronics business to $75 billion in sales by 2030. BHP Group, the world’s largest mining company, reported a 2 percent rise in full-year profit in line with analysts’ expectations, even as China’s property market continued to weigh on the economy and demand for iron ore.
In commodities, crude oil fell after Monday’s gains after Libya’s eastern government announced it would halt exports. Gold also fell.
Major events this week:
China industrial profits on Tuesday
German GDP on Tuesday
US Conference Board Consumer Sentiment Index, Tuesday
NVIDIA Earnings Report Wednesday
Fed Presidents Raphael Bostic and Christopher Waller to speak Wednesday
Eurozone consumer confidence on Thursday
US GDP, initial jobless claims Thursday
Federal Reserve President Raphael Bostic to speak Thursday
Japan unemployment rate, Tokyo consumer price index, industrial production, retail sales, Friday
Eurozone CPI, unemployment rate on Friday
US Personal Income, Spending, PCE, Consumer Sentiment Friday
Some of the key market developments:
stock
S&P 500 futures were down 0.1% as of 10:49 a.m. Tokyo time.
Nasdaq 100 futures fell 0.1%
Japan’s TOPIX rises 0.2%
Australia’s S&P/ASX 200 little changed
Hong Kong’s Hang Seng Index fell 0.8%
The Shanghai Composite Index fell 0.2%
Euro Stoxx 50 futures unchanged
currency
The Bloomberg Dollar Spot Index was little changed.
The euro was little changed at $1.1170
The Japanese yen was little changed at 144.64 yen to the dollar.
The offshore yuan was little changed at 7.1257 per dollar.
Cryptocurrency
Bitcoin fell 0.6% to $63,066.34.
Ether fell 0.2% to $2,683.64.
Bonds
The yield on the 10-year Treasury note was little changed at 3.81%.
Japan’s 10-year government bond yield remained unchanged at 0.880%
Australia’s 10-year government bond yield rose 3 basis points to 3.88%.
merchandise
West Texas Intermediate crude fell 0.5% to $77.02 a barrel.
Spot gold fell 0.3% to $2,509.48 an ounce.
This story was produced with assistance from Bloomberg Automation.
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