US equity futures rallied on a sharp rise in sales forecasts from chipmaker Nvidia Corp., which fueled gains for Asian tech shares without lifting broader stocks benchmarks in the region.
(Bloomberg) — US equity futures rallied on a sharp rise in sales forecasts from chipmaker Nvidia Corp., which fueled gains for Asian tech shares without lifting broader stocks benchmarks in the region.
The Japanese market fluctuated while equities fell in South Korea, Australia and China. Declines for Hong Kong’s Hang Seng Index placed it on course for a third day of losses greater than 1% as global investors remained downbeat on Chinese assets.
Taiwanese stocks rose, bucking the trend in Asia as Taiwan Semiconductor Manufacturing Co. — which supplies Nvidia — climbed almost 3%. South Korean tech bellwethers Samsung Electronics Co. and SK Hynix Inc. advanced and in Tokyo equipment supplier Advantest Corp. surged 20% to an all-time high.
The broader weakness in Asia reflected cross winds as traders contend with the risk of the US defaulting on its debt, the chances of another rate hike by the Federal Reserve, central bank meetings in Seoul and Jakarta, and signs of softness in the Chinese economy.
Gold fluctuated and the yen edged lower after both haven assets spiked higher when Fitch placed US ratings on watch negative. The yen was hovering just below 140 per dollar and at its weakest since November.
The New Zealand dollar added to recent losses after the central bank indicated Wednesday that its rate-hike cycle had peaked. The won was weaker after the Bank of Korea held rates steady Thursday. The rupiah was also down ahead of a decision from the Bank Indonesia, which was also seen standing pat.
Treasury yields were broadly higher across the curve, adding to their advance Wednesday. Yields on the two-year and 10-year Treasury notes climbed to the highest level since mid-March, during the depths of the banking crisis, as investors digested news from Fitch, which said the decision reflected the partisan dispute over the debt ceiling. The ratings agency noted that it still expects a resolution to head off default.
Nasdaq 100 futures rallied 1.4%, holding most of their early gains, even after the Fitch news. The rally followed a 0.5% drop in the underlying index Wednesday amid concerns over the debt-ceiling impasse and uncertainty over the Fed’s next policy decision. Contracts for the S&P 500 jumped 0.4%.
AI impact
Nvidia shares rose by around 25% in after-hours trading following the chipmaker’s report that booming demand for artificial intelligence processors would fuel revenue growth. The action indicated a gain of around $200 billion to its market value.
“The company couldn’t have been more positive about what it’s seeing,” said Adam Crisafulli, analyst and founder of Vital Knowledge media. “In addition to the huge revenue tailwind hitting the company from AI, Nvidia’s gross margins have now largely recovered to prior peak levels.”
In addition to Nvidia and the debt talks, investors were weighing minutes from the Fed’s meeting in early May that showed policymakers leaning toward pausing interest-rate increases in June amid heightened uncertainty over the outlook. Yet the minutes also suggested they aren’t yet ready to call an end to their battle against stubborn inflation.
Other economic headwinds stemming from tighter credit conditions are also not yet reflected in market prices, according to Kim Strand, senior vice president, Franklin Templeton Investment Solutions.
“Our base case is still a recession,” Strand said in an interview on Bloomberg Television. “The rate hike cycle could be over but there is still a lot left in terms of macro economic uncertainty and how that ripples through the economy.”
Key events this week:
- US initial jobless claims, GDP, Thursday
- Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
- Tokyo CPI, Friday
- US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 12:31 p.m. Tokyo time. The S&P 500 fell 0.7% Wednesday
- Nasdaq 100 futures rose 1.4%. The Nasdaq 100 fell 0.5% Wednesday.
- Japan’s Topix was little changed
- Australia’s S&P/ASX 200 fell 0.9%
- Hong Kong’s Hang Seng fell 2%
- The Shanghai Composite fell 0.7%
- Euro Stoxx 50 futures rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.1% to $1.0736
- The Japanese yen fell 0.2% to 139.70 per dollar
- The offshore yuan fell 0.3% to 7.0843 per dollar
- The Australian dollar fell 0.3% to $0.6524
Cryptocurrencies
- Bitcoin fell 0.8% to $26,185.38
- Ether fell 1.4% to $1,779.82
Bonds
- The yield on 10-year Treasuries was little changed at 3.75%
- Japan’s 10-year yield advanced 1.5 basis points to 0.42%
- Australia’s 10-year yield advanced three basis points to 3.68%
Commodities
- West Texas Intermediate crude fell 0.2% to $74.20 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee and Georgina McKay.
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