Focus turns to Nvidia as European stocks soar: Markets Wrap


(Bloomberg) — European equities fell Tuesday, retreating from recent record highs, as investors moved to the sidelines to await Nvidia Corp.'s results this week.

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The STOXX 600 index slipped 0.4%, with drugmaker GSK PLC among the losers amid a whistleblower lawsuit that could cost billions of dollars. Equity futures on the S&P 500 and NASDAQ 100 were barely changed. In premarket New York trading, Palo Alto Networks Inc. The stock slipped more than 8.5% after the security software company issued a disappointing quarterly billings forecast.

Investors continued to monitor commodity prices while gold, silver and copper changed hands near records, after the Bloomberg Commodity Spot Index hit its highest level since January 2023. However, the commodities surge has so far failed to fuel concerns that inflation will stay subdued, allowing the Federal Reserve and other major central banks to cut interest rates this year.

The markets' main focus now is Nvidia – the harbinger of the ongoing artificial-intelligence craze – which has driven a large portion of the S&P 500's recent gains. Nvidia's stock, up more than 90% this year, rose 2.5% in New York on Monday, sending the NASDAQ 100 index to another record high.

“The latest batch of growth, inflation and Fed data have provided macro support for markets to keep grinding higher. NVIDIA’s 1Q24 earnings this week could boost micro AI tailwinds,” Jason Draho at UBS Financial Services Inc. said in a note.

Investors are cautious about potential headwinds for the market after a blistering rally that has lifted MSCI's all-country equity index nearly 10% this year. Although the earnings season has been strong so far, defaults by major companies would be a risk, as markets at record highs “may be more inclined to take profits,” said Emre Akçamak, a portfolio adviser at East Capital in Dubai.

Several central bank officials are also scheduled to speak Tuesday, including Fed Governor Christopher Waller. His comments will be closely watched after Cleveland Fed President Loretta Mester suggested on Monday there was less scope for an interest rate cut than previously expected.

As investors await major catalysts, such as minutes from the latest Fed policy meeting and Nvidia's results, trading volumes have fallen. The value of stock transactions on the New York Stock Exchange on Monday fell to its lowest this year.

In other markets, Bloomberg's dollar spot index traded flat while bond yields remained broadly lower. Crypto prices surged on signs of US approval for exchange-traded funds to invest directly in the second-largest token, Ether.

Earlier, Chinese shares slipped and a broader Asian equity gauge fell after seven days of gains. Data shows there is no sign of a turnaround in China's debt-ridden property sector, with local governments receiving the lowest revenue in eight years from land sales.

Major events of this week:

  • Fed's Thomas Barkin, Christopher Waller, John Williams, Raphael Bostic, Susan Collins, Loretta Meister speak Tuesday

  • US existing home sale, Wednesday

  • Fed Minutes, Wednesday

  • Nvidia earnings, wednesday

  • Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, Consumer Confidence, Thursday

  • G-7 Finance Meeting in Stresa, Italy, 23-25 ​​May

  • US new home sales, initial jobless claims, Thursday

  • Fed's Rafael Bostic speaks, Thursday

  • US Durable Goods, University of Michigan Consumer Sentiment, Friday

  • Fed's Christopher Waller speaks, Friday

Some key movements in the markets:

Shares

  • The Stoxx Europe 600 fell 0.4% as of 10:14 AM London time

  • S&P 500 futures were unchanged

  • NASDAQ 100 futures fell 0.1%

  • Futures on the Dow Jones Industrial Average were little changed

  • MSCI Asia Pacific index fell 0.7%

  • The MSCI emerging markets index fell 0.7%.

currencies

  • Bloomberg dollar spot index little changed

  • The euro rose 0.1% to $1.0871

  • The Japanese yen was little changed at 156.15 per dollar

  • The offshore yuan was little changed at 7.2432 per dollar

  • The British pound was little changed at $1.2717

cryptocurrency

  • Bitcoin rose 2.1% to $70,974.87

  • Ether rose 4.7% to $3,665.7

bond

  • The yield on 10-year Treasuries fell two basis points. up to 4.43%

  • Germany's 10-year yield fell two basis points to 2.51%

  • UK 10-year yield fell three basis points to 4.14%

Goods

  • Brent crude fell 0.9% to $82.93 a barrel

  • Spot gold fell 0.3% to $2,417.81 an ounce

This story was generated with the help of Bloomberg Automation.

-With assistance from Tania Chen, Joanna Ossinger, Selcuk Gokoluk, and Michael Msica.

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