(Bloomberg) — Asian stocks fell after technology giants dragged U.S. stocks lower, with focus shifting from the Federal Reserve’s policy outlook to Nvidia Corp.’s earnings later this week.
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Stock markets in Hong Kong and mainland China opened lower, tracking weakness in South Korean and Australian stocks. U.S. futures fell in Asian trading after some of the world’s biggest tech names dragged down Wall Street.
The declines come after the Magnificent Seven index fell 1.2% on Monday. While more than half of the stocks in the S&P 500 gained, the benchmark U.S. stock index edged lower, reflecting weakness in the tech giants that dominate it.
Treasuries were broadly flat in Asia after 10-year yields rose two basis points to 3.82% on Monday. The dollar was steady.
Expectations ahead of Nvidia’s earnings on Wednesday are high, with analysts anticipating another positive consensus that could prompt the chipmaker to raise its profit forecast. The results could provide more clarity on demand for artificial intelligence, with Nvidia a direct beneficiary of the intense spending by companies building AI infrastructure.
“Leave Powell aside, it’s Jensen Huang’s turn to move markets,” said Ameriprise’s Anthony Saglimbene, referring to the Nvidia CEO. “We think Nvidia’s financial results this week could have more impact on the overall market than Powell’s speech in Jackson Hole last week.”
Chinese consumers returned to the spotlight after shares of PDD Holdings Inc. fell to their biggest drop since 2022 in New York. The Temu owner’s warning of slow sales was the latest disappointment in the sector, where the country’s biggest consumer companies have reported revenue losses.
The world’s second-largest economy showed promising signs in its manufacturing sector, with industrial profits at major Chinese companies rising 4.1 percent year-on-year in July.
In China too, the government has urged Canada to immediately correct the “bad practices” of imposing new tariffs against the Asian nation. Canada, an export-driven economy that relies heavily on trade with the United States, is closely watching the Biden administration’s moves to erect a much higher tariff wall against Chinese electric vehicles, batteries, solar cells, steel and other goods.
This week’s US inflation figures will likely reinforce the view that long-awaited rate cuts are coming soon, while a reading on consumer spending suggests the central bank has managed to keep the expansion intact.
Economists expect the price index for household consumption expenditures excluding food and energy (the Fed’s preferred measure of core inflation) to rise 0.2% in July for the second straight month. That would bring the three-month annualized 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 was appropriate to start cutting rates, while her Richmond counterpart, Thomas Barkin, said he still saw upside risks to inflation, although he favored a “cut” in rates.
“Powell sealed the deal for a September rate cut in Jackson Hole, leaving our continued widening/rotation thesis intact,” said Ohsung Kwon of Bank of America Corp. “But don’t sleep on Nvidia earnings, a consistent driver of S&P returns and always a risk to markets if they disappoint.”
In corporate news, LG Electronics Inc. is considering an initial public offering for its India business, tapping a booming stock market to help it reach a target of $75 billion in electronics revenue by 2030. BHP Group Ltd., the world’s largest miner, reported a 2% rise in annual profit, in line with analysts’ forecasts, even as China’s property market continues to weigh on its economy and demand for iron ore.
In commodities, oil fell after rising on Monday as the eastern Libyan government announced it would suspend exports. Gold declined.
Main events of the week:
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Chinese industrial profits, Tuesday
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Germany’s GDP, Tuesday
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U.S. Conference Board Consumer Confidence Index, Tuesday
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Nvidia Results, Wednesday
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Fed members Raphael Bostic and Christopher Waller speak Wednesday
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Eurozone consumer confidence, Thursday
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US GDP, initial jobless claims, Thursday
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Fed Chairman Raphael Bostic Speaks Thursday
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Japan: Unemployment, Tokyo CPI, Industrial Production, Retail Sales, Friday
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Eurozone CPI, unemployment, Friday
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U.S. Personal Income, Spending, PCE, Consumer Sentiment, Friday
Some of the main movements in the markets:
Actions
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S&P 500 futures fell 0.1% as of 10:49 a.m. Tokyo time.
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Nasdaq 100 futures fell 0.1%
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Japan’s Topix rose 0.2%
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Australia’s S&P/ASX 200 index was little changed
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Hong Kong’s Hang Seng Index fell 0.8%
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The Shanghai Composite Index fell 0.2%
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Euro Stoxx 50 futures remained unchanged
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1170.
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The Japanese yen was little changed at 144.64 per dollar.
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The offshore yuan was little changed at 7.1257 per dollar.
Cryptocurrencies
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Bitcoin fell 0.6% to $63,066.34
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Ether fell 0.2% to $2,683.64
Bonds
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The 10-year Treasury yield was little changed at 3.81%
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Japan’s 10-year yield was unchanged at 0.880%.
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Australia’s 10-year yield rose three basis points to 3.88%.
Raw materials
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West Texas Intermediate crude fell 0.5% to $77.02 a barrel
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Spot gold fell 0.3% to $2,509.48 an ounce
This story was produced with assistance from Bloomberg Automation.
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