Asian markets displayed muted movements as investor sentiment remained cautious amid concerns regarding artificial intelligence valuations, particularly as they awaited earnings results from NVIDIA, a key player in the sector.
The tech-heavy Nasdaq Composite Index experienced a decline of 1.2% on the previous day, marking its second consecutive day of losses and pushing it more than 6% below a record high achieved in late October. Futures for both the S&P 500 and Nasdaq 100 traded near neutral territory during the Asian session. Japan’s Nikkei managed a slight gain of 0.4%, while South Korea’s Kospi saw a decrease of 0.8%.
NVIDIA, which relies heavily on graphics processing units (GPUs) that are essential for AI applications, has significantly influenced the recent rally that lifted global stock markets to unprecedented levels. The company is anticipated to report impressive earnings for the fiscal quarter ending in October, with estimates predicting a 56% year-over-year revenue increase to approximately $54.92 billion. However, market experts express caution. Wong Kok Hoi, CEO of APS Asset Management in Singapore, remarked that NVIDIA’s stock price seems to be predicated on ideal growth conditions, suggesting that robust GPU demand must continue for the stock’s price to remain stable.
Meanwhile, uncertainty surrounds potential U.S. interest rate cuts. Traders are increasingly skeptical that the Federal Reserve will implement another rate cut in December, complicating investor sentiment. Political dynamics, such as declining approval ratings for President Donald Trump, have further cast doubt on fiscal spending, giving rise to inflationary fears. Although yields on U.S. Treasuries dipped slightly overnight, they remain relatively stable, with benchmark 10-year yields holding at approximately 4.11%. Current market assessments assign a 42% probability to a 25-basis point cut in December, a dramatic shift from previous expectations.
In Japan, anxieties around escalating government spending have placed downward pressure on long-end bonds, pushing yields to historic highs. The market is closely eyeing an upcoming 20-year bond auction as benchmark 10-year yields approached a 17-year peak of 1.765%.
Bitcoin has seen a slight rebound following a drop to a seven-month low, currently trading at around $92,000; this still represents a 27% decline from its record high in October. According to Justin d’Anethan, head of research at Arctic Digital, those who invested in Bitcoin over the past ten months are currently facing significant losses. However, he does not foresee this dip signalling the onset of a bear market but rather a response to equity market volatility and shifting expectations regarding interest rate adjustments.
Forex markets appeared largely stable, with a trend towards the U.S. dollar. The Japanese yen was under pressure at 155.45 per dollar, nearing intervention thresholds set by authorities. The euro held steady at $1.1582, while the Australian and New Zealand dollars experienced slight declines in morning trading.
In commodities, gold, which last month reached record highs alongside stock prices, has faced downward pressure, trading at $4,066. Meanwhile, Brent crude futures decreased by 35 cents to $64.51 per barrel, and soybean prices rose to a 17-month high following significant purchases from China of U.S. supplies.
