Stocks retreat as Nvidia Outlook undermines AI trading

(Bloomberg) — European and U.S. stock futures fell after Nvidia Corp.’s outlook. failed to meet the highest expectations, taking the wind out of a global AI rally.

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Contracts for the Euro Stoxx 50 fell 0.2%, while futures on the Nasdaq 100 Index fell 0.5%. An Asian stock benchmark fell 0.2%, with chip makers Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. were among the heaviest blows. Nvidia lost more than 8% in post-market trading.

Nvidia’s disappointing sales forecasts threaten to cool the AI ​​frenzy that has powered global tech stocks for much of this year. Once these all-important gains are digested, investor attention may shift to a range of U.S. data, including personal consumption and weekly jobless claims expected later Thursday, to bolster expectations about how quickly the Federal Reserve will ease this year.

“Expectations were very high, sooner or later this was going to happen,” Joshua Crabb, head of Asia Pacific Equities at Robeco Hong Kong Ltd., said of Nvidia’s results. “The AI ​​proxies will have a tougher day.”

10-year government bond yields were steady after rising one basis point to 3.84% in the previous session. The dollar fell slightly after a broad rise amid speculation that investors were buying the US currency to rebalance their portfolios.

Investors are weighing the prospects for a US rate cut as Fed Bank of Atlanta President Raphael Bostic said it “may be time to cut” but he is still looking for additional data to support it lowering the interest rate next month.

The New Zealand dollar strengthened after the country’s business confidence rose to its highest level in a decade. In Japan, sales of two-year government bonds saw the highest bid-coverage ratio since 2019 after a recent rise in yields attracted investors.

In China the series of dismal earnings figures continued. Shares of EV maker Li Auto Inc. fell by as much as 15% after missing estimates. Pear BYD Co. also fell despite a 33% increase in profits. Adding to the downbeat mood, UBS Group AG cut its forecast for Chinese growth this year and next, citing a deeper-than-expected slump in the property market.

Although Nvidia’s expectations were disappointing, revenue more than doubled to $30 billion in its fiscal second quarter, which ended July 28. And the Santa Clara, California-based company’s board of directors approved another $50 billion in stock buybacks.

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In commodities, oil held steady after a two-day slide, with stock market losses offsetting a drop in U.S. inventories and supply disruptions in Libya. Gold traded just below its record high, on track for a monthly gain.

Main events this week:

• 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

• S&P 500 futures fell 0.2% as of 6:50 a.m. London time

• Nikkei 225 futures (OSE) fell 0.1%

• The Japanese Topix was little changed

• Australia’s S&P/ASX 200 fell 0.3%

• Hong Kong’s Hang Seng fell 0.1%

• The Shanghai Composite fell 0.4%

• Euro Stoxx 50 futures fell 0.2%

• Nasdaq 100 futures fell 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.1135

• The Japanese yen was little changed at 144.68 per dollar

• The offshore yuan rose 0.3% to 7.1112 per dollar

• The Australian dollar rose 0.3% to $0.6802

• The British pound rose 0.2% to $1.3213

Cryptocurrencies

• Bitcoin rose 0.2% to $59,450.99

• Ether was little changed at $2,540.3

Bonds

• The yield on 10-year government bonds was little changed at 3.83%

• The Japanese ten-year yield remained unchanged at 0.890%

• The Australian ten-year yield rose by two basis points to 3.95%

Raw materials

• West Texas Intermediate crude rose 0.2% to $74.69 a barrel

• Spot gold rose 0.5% to $2,517.76 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Matthew Burgess, Kurt Schussler, and Abhishek Vishnoi.

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