US stock futures rise on Nvidia, Asia stocks fall: Markets Wrap

(Bloomberg) — U.S. stock futures rallied on a sharp increase in chipmaker Nvidia Corp.’s sales forecasts, leading to gains for Asian tech stocks without lifting broader equity benchmarks in the region.

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The Japanese market faltered while stocks in South Korea, Australia and China fell. The decline in Hong Kong’s Hang Seng index put it on track for a third day of losses of more than 1% as global investors remained bullish on Chinese assets.

Taiwanese shares bucked the trend in Asia, as Taiwan Semiconductor Manufacturing Co. — which supplies Nvidia — rose nearly 3%. South Korean tech leaders Samsung Electronics Co. and SK Hynix Inc. rose, and Tokyo-based equipment supplier Advantest Corp. up 20% to an all-time high.

Broader weakness in Asia reflected headwinds as traders grappled with the risk of a US default, chances of another rate hike by the Federal Reserve, central bank meetings in Seoul and Jakarta and signs of weakness in the Chinese economy.

Gold faltered and the yen weakened slightly after both safe haven assets rallied sharply as Fitch downgraded US ratings to negative. The yen hovered just below 140 per dollar, its weakest level since November.

The New Zealand dollar added to recent losses after the central bank said its rate hike cycle had peaked on Wednesday. The won was weaker after the Bank of Korea kept interest rates steady on Thursday. The rupiah also fell ahead of a decision by Bank Indonesia, which also went unheeded.

Government bond yields were generally higher across the curve, contributing to their rise on Wednesday. Two- and ten-year government bond yields rose to their highest levels since mid-March, when the banking crisis was at its peak, as investors digested news from Fitch that the decision reflected partisan rows over the debt ceiling. The rating agency stated that it still expects a solution to prevent a default.

Nasdaq 100 futures are up 1.4% and held on to most of their early gains, even after the Fitch news. The rally was followed by a 0.5% drop in the underlying index on Wednesday amid concerns over the debt ceiling impasse and uncertainty over the next Fed policy decision. Contracts for the S&P 500 rose 0.4%.

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Nvidia shares rose about 25% in after-hours trading after the chipmaker reported that booming demand for artificial intelligence processors would spur sales growth. The action suggested an increase in market value of around $200 billion.

“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 tremendous revenue boost the company is receiving from AI, Nvidia’s gross margins have now largely recovered to previous highs.”

In addition to Nvidia and the debt talks, investors also considered minutes from the Fed’s early May meeting, which showed policymakers tended to put rate hikes on hold in June amid heightened uncertainty about the outlook. But the minutes also indicated that they are not yet ready to end their fight against stubborn inflation.

According to Kim Strand, senior vice president of Franklin Templeton Investment Solutions, other economic headwinds due to tighter credit conditions are not yet reflected in market prices.

“Our base case is still a recession,” Strand said in an interview with Bloomberg Television. “The rate hike cycle may be over, but much still remains in terms of macroeconomic uncertainty and how that is affecting the economy.”

Important events this week:

• US Initial Jobless Claims, GDP, Thursday

• Rate decisions in Turkey, South Africa, Indonesia, South Korea Thursday

• Tokyo CPI, Friday

• US Consumer Income, Wholesale Inventories, Durable Staples, University of Michigan Consumer Sentiment, Friday

Some of the key movements in the markets:

Shares

• S&P 500 futures were up 0.4% as of 12:31 p.m. Tokyo time. The S&P 500 fell 0.7% on Wednesday

• Nasdaq 100 futures rose 1.4%. The Nasdaq 100 fell 0.5% on Wednesday.

• Japan’s Topix has hardly 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 up 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

Bind

• The 10-year government bond yield was little changed at 3.75%

• Japan’s 10-year yield rose 1.5 basis points to 0.42%

• Australia’s 10-year yield rose three basis points to 3.68%

raw materials

This story was created with the support of Bloomberg Automation.

– With support from Isabelle Lee and Georgina McKay.

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