Asian markets largely retreated on Wednesday with technology-heavy indexes falling in anticipation of earnings from market darling Nvidia, while Australian stocks sank on a sticky inflation print. Persistent concerns over China also kept sentiment towards Asia on edge, after Canada said it will impose steep trade tariffs on the region’s biggest economy.
Regional markets took middling cues from Wall Street, as the Dow Jones Industrial Average and S&P 500 crept higher to record highs. But the NASDAQ Composite lagged amid some caution before Nvidia’s earnings. Expectations of rate cuts also spurred a pivot out of technology and into more economically sensitive sectors.
U.S. stock index futures fell in Asian trade.
Tech Stocks Retreat
Tech-heavy Asian bourses retreated on Wednesday, with chipmaking stocks skittish ahead of earnings from NVIDIA Corporation (NASDAQ:NVDA).
South Korea’s KOSPI fell 0.5%, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng indexes lost about 0.3% and 0.8%, respectively.
Focus will be squarely on whether Nvidia continued to benefit from strong demand for artificial intelligence- a trend that saw the stock surge nearly 160% in value so far in 2024.
Nvidia is considered as a bellwether for the AI industry, with any takeaways from its earnings, due later on Wednesday, likely to factor into Asian technology stocks.
Chip Stocks Mixed
Stocks with direct exposure to Nvidia were a mixed bag. Taiwan’s TSMC (TW:2330) (NYSE:TSM) was flat in Taipei trade, while Japanese semiconductor testing equipment maker Advantest Corp. (TYO:6857) surged nearly 3%.
South Korean memory chip maker SK Hynix Inc (KS:000660), a major Nvidia supplier, fell 0.1%. Semiconductor Manufacturing International Corp (HK:0981)- China's biggest chipmaker and a local competitor for Nvidia, slid more than 13%.
Australian Inflation
Australia’s ASX 200 was among the worst performers in Asia, losing 0.6% after consumer price index data read stronger than expected for July.
Headline CPI rose 3.5%, slightly above expectations and well above the Reserve Bank of Australia’s 2% to 3% annual target. The reading fueled concerns that sticky inflation could potentially invite a rate hike by the RBA, after policymakers warned of such a scenario earlier in August.
While underlying CPI fell, it was still relatively high.
China Concerns Linger
Broader Asian markets also retreated. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 0.3%, respectively, as sentiment towards the country was dented by Canada imposing steep trade tariffs on China’s electric vehicle industry.
While the economic impact of the tariffs is expected to be negative, investors feared the onset of a renewed trade war between China and the west, given that the U.S. and the European Union had also enacted similar tariffs earlier this year.
Some major Chinese earnings are also on tap, with EV makers BYD Co (HK:1211) and Li Auto (NASDAQ:LI) Inc (HK:2015) set to report later on Wednesday.
Awaitting Nvidia's Earnings
Traders are biding their time ahead of the release of key figures, including Nvidia's earnings and US economic data. Investors will be keeping a close watch on the earnings release by chip giant Nvidia this week, hoping for an idea about demand for artificial intelligence tech. US shares fell marginally and European stock markets mostly inched higher Wednesday as investors cautiously awaited the latest earnings results from US chip giant Nvidia, a bellwether for the tech sector. Investors will be keeping a close watch on the earnings release by chip giant Nvidia this week, hoping for an idea about demand for artificial intelligence tech. Stock markets were little changed Tuesday as investors awaited clues on how much US interest rates might be cut next month and the latest results from tech heavyweight Nvidia.
