(Bloomberg) — Asian shares fell after technology giants dragged U.S. stocks lower, with attention shifting from the Federal Reserve’s policy outlook to Nvidia Corp. earnings due later this week.
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Hong Kong and mainland Chinese markets opened weak, led by weakness in South Korean and Australian equities. US futures fell in Asian trade after some of the world's biggest tech names pushed Wall Street lower.
The drop came after a gauge of the “Magnificent Seven” megacaps dropped 1.2% on Monday. While more than half the stocks in the S&P 500 posted gains, the U.S. equity benchmark fell — a result of weakness in the tech giants that dominate it.
Treasuries were steady in Asia after the 10-year yield rose two basis points to 3.82% on Monday. The dollar was steady.
Nvidia earnings on Wednesday have very high expectations, with analysts expecting another strong consensus that could prompt the chipmaker to raise its profit guidance. The results could also provide more clarity on demand for artificial intelligence, as Nvidia is a direct beneficiary of the rapid spending by companies building AI infrastructure.
“Move over Powell – it's Jensen Huang's turn to move markets,” said Anthony Saglimbene at Ameriprise, referring to Nvidia's chief. “In our view, Nvidia's earnings report this week could actually have a greater impact on the overall market than Powell's Jackson Hole speech last week.”
Chinese consumers are back in the spotlight after PDD Holdings Inc. shares in New York fell by their biggest drop since 2022. The warning of slowing sales by the owner of Temu was the latest disappointment from the sector, where the country’s biggest consumer companies have reported shrinking revenue.
The world's second-largest economy showed some promising signs in its manufacturing sector, with industrial profits at large Chinese companies rising 4.1% year-on-year in July.
Also in China, the government urged Canada to immediately correct the “wrong practices” of the new tariffs against the Asian nation. Canada, an export-driven economy that relies heavily on trade with the U.S., is closely tracking moves by the Biden administration to erect a much higher tariff wall against Chinese EVs, batteries, solar cells, steel and other products.
US inflation data this week will likely reinforce that a long-awaited interest rate cut is imminent, while consumer spending data will likely suggest the central bank has managed to keep the expansion afloat.
Economists believe the personal consumption expenditures price index excluding food and energy – the Fed's preferred measure of underlying inflation – will rise by 0.2% for a second consecutive month in July. That would bring the three-month annual rate of so-called core inflation down to 2.1%, slightly above the central bank's 2% target.
Mary Daly, president of the Fed Bank of San Francisco, said it was appropriate to begin cutting rates, while her Richmond counterpart Thomas Barkin said he still saw upside risks to inflation, though he supported keeping rates “low.”
“Powell has sealed the deal for a September rate cut at Jackson Hole — which keeps our thesis for a continued extension/rotation intact,” said Ohsung Kwon of Bank of America Corp. “But don’t look out for Nvidia earnings, which are a consistent driver of S&P returns and are still a risk to markets if they disappoint.”
In corporate news, LG Electronics Inc. is considering an initial public offering for its India business, taking advantage of a booming stock market to help it achieve a target of $75 billion of electronics revenue by 2030. BHP Group Ltd., the world's biggest miner, reported a 2% rise in full-year profit, in line with analysts' forecasts, while China's property market remained under pressure as its economy and iron ore demand faltered.
In commodities, oil fell after gains on Monday as Libya's eastern government said it would halt exports. Gold fell.
Major events of this week:
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China industrial profit, Tuesday
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Germany GDP, Tuesday
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US Conference Board Consumer Confidence, Tuesday
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Nvidia Earnings, Wednesday
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The Fed's Raphael Bostic and Christopher Waller will speak on Wednesday
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Eurozone Consumer Confidence, Thursday
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US GDP, initial jobless claims, Thursday
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Speech by Fed's Raphael Bostic on Thursday
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Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
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Eurozone CPI, unemployment, Friday
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US personal income, spending, PCE; consumer sentiment, Friday
Some of the main activities in the market:
Shares
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S&P 500 futures fell 0.1% as of 10:49 a.m. Tokyo time
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Nasdaq 100 futures fell 0.1%
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Japan's Topix gained 0.2%
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Australia's S&P/ASX 200 was little changed
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Hong Kong's Hang Seng fell 0.8%
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Shanghai Composite lost 0.2%
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Euro Stoxx 50 futures were unchanged
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1170.
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The Japanese yen was little changed at 144.64 per dollar.
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The offshore yuan was little changed at 7.1257 per dollar.
Cryptocurrency
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Bitcoin fell 0.6% to $63,066.34
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Ether fell 0.2% to $2,683.64
Bonds
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The yield on the 10-year Treasury was little changed at 3.81%.
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Japan's 10-year yield remained unchanged at 0.880%
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Australia's 10-year yield rose three basis points to 3.88%
Objects
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West Texas Intermediate crude fell 0.5% to $77.02 a barrel.
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Spot gold fell 0.3% to $2,509.48 per ounce
This story was generated with assistance from Bloomberg automation.
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