Asian stocks falter after US hits new record: markets retreat

(Bloomberg) — Asian stocks struggled to find solid footing due to a lack of local movers after the S&P 500 hit a new record ahead of results from giant chipmaker Nvidia Corp.

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Japan’s stocks fell as the country reported a trade deficit, while Australia’s stocks rose. Stock indexes in Hong Kong and mainland China fell at the open. U.S. futures were little changed in early Asian trading after the S&P 500 posted its 24th record high this year.

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

“Asian markets are showing waning optimism as investors await the direction of the next catalyst while digesting mixed local data,” said Hebe Chen, analyst at IG Markets. “The Japanese market is taking a step back today amid poor trade data,” she added.

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

Treasuries steadied after global bonds rallied in the latest sign that developed countries are finally getting inflation under control. Federal Reserve Governor Christopher Waller said the recent report on price pressures in the United States was “a reassuring signal.” Australian yields were flat on Wednesday morning. The Bloomberg gauge of dollar strength was little changed.

Trade in Asia is likely to be quieter as Singapore is closed for holidays. Gold, silver and copper consolidated near recent highs, while oil fell after an industry report showed rising inventories.

Volatility awaits you

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

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

Goldman’s risk appetite measure rose to its highest level since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team wrote directed by Andrea Ferrario.

The story continues

Strategists point to options data from the CBOE Volatility Index that signals higher demand for hedges against sudden market declines, at a time when the indicator has fallen to historic lows.

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

Low expectations for stocks and a preference for a 5% to 6% yield on Treasuries suggest markets are still in the “fear” part of the current cycle, the senior portfolio manager of the banking arm said Tuesday. management of the bank’s investments.

Key events this week:

• Existing home sales in the United States, Wednesday

• Fed Minutes, Wednesday

• Nvidia results, Wednesday

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

• G7 finance meeting, May 23-25

• New home sales in the United States and first unemployment claims, Thursday

• Fed’s Raphael Bostic speaks Thursday

• US durable goods, consumer confidence, Friday

• Fed’s Christopher Waller speaks Friday

Actions

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

• The Japanese Topix fell 0.5%

• Australia’s S&P/ASX 200 rose 0.2%

• Hong Kong’s Hang Seng has changed little

• The Shanghai Composite has changed little

• Euro Stoxx 50 futures rose 0.2%

• Nasdaq 100 futures little changed

Currencies

• Bloomberg Dollar Spot Index 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

Obligations

• The yield on 10-year Treasury bills changed little at 4.41%

• The Japanese 10-year yield is unchanged at 0.980%

• The Australian 10-year yield was little changed at 4.24%

Raw materials

This story was produced with the help of Bloomberg Automation.

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