Asian shares rangebound as traders await Nvidia results

Sydney — Asian shares held tight ranges on Wednesday as investors awaited results from tech darling Nvidia to see if the sector's lofty valuations can withstand a jump in bond yields, while still gloomy factory readings from Japan left sentiment fragile.

S&P 500 futures climbed 0.3% while Nasdaq futures rose 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan were up 0.1%, hovering not far away from its nine-month trough hit only two sessions ago. Japan’s Nikkei rose a meagre 0.2%.

Data on Wednesday showed Japan’s factory activity shrank for a third consecutive month in August, offering the first glimpse into the health of global manufacturing this month. The US will also report its flash purchasing mangers index (PMI) readings on Wednesday, which is likely to show the factory sector remained in contraction.

Chinese shares gave up some gains, with blue chips off 0.7% after a rebound of 0.8% the previous day, and Hong Kong’s Hang Seng index easing 0.1% after jumping 1%.

Metal prices kept climbing for a second day, with iron ore prices gaining as much as 3.2% and coking coal futures up by a similar amount.

Investors are eagerly awaiting results from chip company Nvidia due late on Wednesday. Its blockbuster report last quarter fuelled a rally in tech stocks and artificial intelligence (AI) hopes, propelling the S&P 500 in 2023.

Shares of Nvidia hit a record high of $481.87 overnight, with options data showing traders are expecting a larger-than-usual swing in shares after the quarterly results.

Analysts expect Nvidia to forecast 110% growth in third-quarter revenue to $12.50bn. Stuart Humphrey, an analyst at JPMorgan, said some are forecasting $14bn-$15bn.

“This kind of number feels a touch high to me, but if it sniffs this — one could argue that into this print, it doesn’t matter if demand will eventually decline next year — [it] still will be rerated higher,” Humphrey said.

Overnight, Wall Street was hit by higher yields which hit fresh 16-year highs. The Dow Jones fell 0.5%, the S&P 500 lost 0.3% and the Nasdaq Composite added 0.1%.

Financial shares underperformed, with the S&P 500 banks sliding 2.4%, after S&P joined Moody’s to downgrade multiple regional US lenders.

Elsewhere, treasuries took a breather from the recent rout. Ten-year yields eased two basis points to 4.3082% in Asia, after touching a 16-year top of 4.3660% a session earlier.

A jump in treasury issuance, Fitch’s credit downgrade three weeks ago and concerns China will dump treasuries to support the yuan have added to a sell-off as investors await the Fed’s annual summit in Jackson Hole, Wyoming, later this week for more rate clues.

Comments from Richmond Fed president Thomas Barkin raised the expectation that chair Jerome Powell would drive home a hawkish message, after strong US economic data makes the “re-acceleration scenario” possible.

In the currency markets, the dollar was still standing strong near its two month top at 103.5 against a basket of major currencies.

The yen gained 0.2% to ¥145.6 to the dollar, pulling further away from a nine-month trough of ¥146.56, amid talks that Japan will only intervene in the market if the currency plunges past 150 to the dollar.

Oil prices were largely flat. Brent crude futures was little changed at $84.00 a barrel and US West Texas Intermediate crude futures also flat at $79.7.

The gold price was slightly higher at $1,901.20/0z.

Reuters