(Nov 18): Asian stocks were poised to drop Tuesday as investors shunned riskier assets, reflecting caution ahead of Nvidia Corp’s earnings and a US jobs report later this week.
Equity index futures for Japan, Australia and Hong Kong pointed to losses in early trading after the S&P 500 dropped 0.9% and the Nasdaq 100 shed 0.8%. A gauge of US-listed Chinese stocks tumbled 1.2%, a global stock gauge fell to a one-month low and bitcoin traded around the lowest since April.
An index of the dollar firmed 0.3% on Monday while Treasuries were mainly higher.
The moves underscored the mood of uncertainty around interest rates and tech earnings. Nvidia’s report on Wednesday will come amid investor uneasiness about stratospheric artificial intelligence (AI) valuations even though the chipmaker is expected to deliver another earnings beat. Then there’s the September jobs report, which will be released Thursday after a delay due to the US shutdown.
“The monthly jobs report would normally dominate this week’s economic calendar, but with the AI trade struggling the past couple of weeks, Nvidia’s earnings are once again looking like a key piece of the market’s momentum puzzle,” said Chris Larkin at E*Trade from Morgan Stanley.
Heightening the uncertainty over Nvidia’s results, a filing showed Peter Thiel’s hedge fund sold its stake in the chip-maker during the third quarter.
See also: World-beating stock rally creates new headaches in Korean market
“While we should expect an eventual reckoning for blindly throwing trillions of dollars at AI capital expenditures with no clear path to profitability, markets are unlikely to tip over while the Fed is still in easing mode and the economy is still strong,” said Dennis Follmer at Montis Financial.
Rates outlook
Fed vice chair Philip Jefferson said he sees risks to the labour market as skewed to the downside, but warned policymakers need to proceed slowly. Meanwhile, Fed governor Christopher Waller is backing a cut in December, citing weak jobs.
See also: Stellantis takes fresh swipe at BYD on EV sales in Europe
Interest-rate strategists at Goldman Sachs Group Inc, Barclays plc and Bank of America Corp are among those expecting US economic data delayed by the government shutdown will revive the case for a Fed interest-rate cut in December.
Though Treasury yields are little changed from late-September levels, “reductions in near-term cut pricing and lower front-end inflation through the course of the shutdown reflect a hawkish shift in the market’s Fed assessment,” a Goldman team including William Marshall and George Cole wrote in a Nov 14 report.
Bitcoin traded around US$92,000 after a decline that erased its gains for the year accelerated on Monday. An index which tracks the 50 smallest digital assets in a basket of 100 fell to its lowest level since November 2020 on Sunday.
In credit markets, Amazon.com Inc was pricing a US$15 billion US dollar bond offering, its first in three years.
In Asia, data set for release includes Reserve Bank of Australia meeting minutes, household credit for South Korea and unemployment for Hong Kong.
Gold fell on Monday while crude prices also declined. West Texas Intermediate dropped around 0.6% as signs that activity had resumed at a key Russian port were countered by wider geopolitical risks to prices.
Uploaded by Isabelle Francis
