Asian Stocks Wobble After US Hits Fresh Record: Markets Wrap

(Bloomberg) — Asian stocks struggled for solid footing amid a lack of local drivers after the S&P 500 crept to another record ahead of results from giant chipmaker Nvidia Corp.

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Shares in Japan fell as the country reported a trade deficit, while those in Australia climbed. Equity benchmarks in Hong Kong and mainland China slipped at the open. US futures were little changed in early Asia trading after the S&P 500 saw its 24th record this year.

MSCI Inc.’s Asia Pacific index is down for a second day after a seven-session win streak. Investors are waiting to see if Nvidia, the poster child of artificial intelligence, will be able to match the sky-high expectations surrounding the technology. Central bank events are also in focus for cues on the direction of global rates.

“Asian markets show waning optimism as investors await direction from the next catalyst while digesting mixed local data,” said Hebe Chen, an analyst at IG Markets. “Japan’s market takes a back foot today amid lackluster trading data,” she added.

The Reserve Bank of New Zealand and Bank Indonesia are set to hold rates steady on Wednesday, while the minutes of the Federal Reserve’s latest meeting will also be released later in the day. The central bank in South Korea is expected to stand pat on Thursday.

Treasuries steadied after global bonds rallied on the latest sign that developed nations are finally getting a grip on inflation as Federal Reserve Governor Christopher Waller said the recent report on US price pressures was “a reassuring signal.” Australian yields were flat early on Wednesday. A Bloomberg gauge of dollar strength was little changed.

Trading in Asia will likely be quieter with Singapore closed for a holiday. Gold, silver and copper consolidated near recent highs, while oil slipped after an industry report showed a jump in stockpiles.

Volatility Awaits

Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs Group Inc. strategists.

The Santa Clara, California-based company — whose shares have soared over 90% this year after more than tripling in 2023 — is expected to report revenue buoyed by soaring demand in its data-center business.

Goldman’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote.

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The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.

For Morgan Stanley’s Andrew Slimmon, there’s still plenty of room for the market to extend its gains from all-time highs.

Low expectations for equities and the preference for a 5% to 6% yield from Treasury bills suggests that markets are still in the “fear” part of the current cycle, the senior portfolio manager at the bank’s investment management arm said Tuesday.

Key events this week:

• US existing home sales, Wednesday

• Fed minutes, Wednesday

• Nvidia earnings, Wednesday

• Eurozone S&P Global services and manufacturing PMIs, consumer confidence, Thursday

• G-7 finance meeting, May 23-25

• US new home sales, initial jobless claims, Thursday

• Fed’s Raphael Bostic speaks, Thursday

• US durable goods, consumer sentiment, Friday

• Fed’s Christopher Waller speaks, Friday

Stocks

• S&P 500 futures were little changed as of 10:34 a.m. Tokyo time

• Japan’s Topix fell 0.5%

• Australia’s S&P/ASX 200 rose 0.2%

• Hong Kong’s Hang Seng was little changed

• The Shanghai Composite was little changed

• Euro Stoxx 50 futures rose 0.2%

• Nasdaq 100 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0856

• The Japanese yen was little changed at 156.31 per dollar

• The offshore yuan was little changed at 7.2477 per dollar

• The Australian dollar was little changed at $0.6668

Cryptocurrencies

• Bitcoin rose 0.6% to $70,147.01

• Ether rose 1% to $3,784.59

Bonds

• The yield on 10-year Treasuries was little changed at 4.41%

• Japan’s 10-year yield was unchanged at 0.980%

• Australia’s 10-year yield was little changed at 4.24%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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