European Stocks Improve as Nvidia Earnings Loom: Markets Close

(Bloomberg) — European stocks were poised for modest gains as traders await Nvidia Corp. results. for clues about the growth momentum of AI-related stocks. Asian shares traded within narrow ranges, while corporate earnings in China were weak.

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Euro Stoxx 50 futures rose 0.1%, indicating a subdued start for stocks in the region, while contracts for U.S. stocks were little changed in Asian trading.

Chinese shares in Hong Kong fell as much as 1.6%, while those in the mainland fell to their lowest since early February. Shares of bottled water maker Nongfu Spring Co. fell as much as 13% after the slowest half-year profit growth in four years, becoming the latest company to post disappointing results.

“So far, we are still seeing many more downgrades than upgrades” in China’s earnings, Winnie Wu, a China equity strategist at Bank of America Corp., told Bloomberg TV. Internet companies are outperforming other sectors when it comes to exceeding earnings expectations, but the materials, technology, construction, automotive and other industries pose significant downside risks, she said.

Most major benchmarks in Asia were in the red, with South Korea and Hong Kong posting losses. The yield on two-year government bonds, which is more sensitive to interest rate policy, fell by three basis points.

Weak sentiment toward China resurfaced following sluggish guidance earlier this week from e-commerce company PDD Holdings Inc. The drumbeat of faltering growth has continued thanks to commentary from other companies.

ANTA Sports Products Ltd. also cut full-year sales guidance for one of its core brands on Tuesday, amid expectations that it would have to dole out more discounts to woo buyers in the country. Meanwhile, Australia’s Fortescue Ltd. a full-year profit that fell short of analyst expectations, partly due to a slowdown in iron demand from its biggest customer China.

Cnooc Ltd., BYD Co. and Meituan will all report on Wednesday. Later in the US, investors will be looking for clues as to whether the artificial intelligence euphoria has more headroom as the world’s most influential stock, Nvidia, is set to report profits.

“We see weaker performance in Asia today, possibly because the run-up to Nvidia’s results tonight could limit risk-taking,” said Jun Rong Yeap, 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.”

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The yen extended losses to 0.4% against the dollar after comments from Bank of Japan Deputy Governor Ryozo Himino. The BOJ will raise rates as long as inflation remains in line with the bank’s view, and it should monitor developments with “utmost vigilance,” Himino said.

The shares of Seven & i Holdings Co. fell after the 7-Eleven store operator applied to authorities for national security status, a move that could raise potential hurdles to a takeover. The filing came after Alimentation Couche-Tard Inc. approached the company last week.

Meanwhile, Japan issued its highest emergency warning as Typhoon Shanshan barreled towards the southern island of Kyushu.

In other Asian business developments, shares of Hong Kong’s HSBC Holdings Plc rose to outperform the benchmark after Bloomberg reported that Europe’s largest bank is considering plans to remove layers of middle management.

Berkshire Hathaway Inc. by Warren Buffett has sold another $982 million worth of Bank of America stock, a regulatory filing shows.

Bitcoin fell below the $60,000 level early Wednesday as part of a broad crypto market pullback that included a sharp decline in the second-largest token Ether.

Oil was steady after falling in the previous session, ending a three-day rally. Gold retreated after a three-day advance, moving 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 reports. Trading in the options market involves a move of almost 10% in either direction the day after the results. The stock is up about 160% this year and 1,000% from the October 2022 bear market low.

On average, analysts predict that the giant chipmaker will forecast revenue growth of more than 70% for the current quarter. Some estimate an even greater increase. Nvidia’s results and forecasts will also serve as a barometer for AI spending across much of the tech industry.

Main events this week:

• Nvidia earnings, Wednesday

• The Fed’s Raphael Bostic and Christopher Waller will speak on Wednesday

• Consumer confidence in the eurozone, Thursday

• US GDP, first jobless claims, Thursday

• Raphael Bostic of the Fed will speak on Thursday

• Unemployment in Japan, CPI in Tokyo, industrial production, retail sales, Friday

• CPI eurozone, unemployment, Friday

• US personal income, expenses, PCE; consumer confidence, Friday

Some of the major moves in the markets:

Stocks

• Futures on the S&P 500 were little changed at 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

Raw materials

• West Texas Intermediate crude fell 0.1% to $75.43 a barrel

• Gold fell 0.7% to $2,507.33 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Abhishek Vishnoi.

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