Asian Stocks Retreat Amid Inflation and Nvidia Earnings
Most Asian stocks retreated on Wednesday, particularly in technology-heavy indexes, as markets anticipated upcoming earnings from Nvidia. Australian stocks dipped following a sticky inflation report.
Concerns about China’s economy continued to influence market sentiment, particularly after Canada announced significant trade tariffs affecting China, the region’s largest economy.
Asian markets took mixed cues from Wall Street; the Dow Jones Industrial Average and S&P 500 reached record highs, while the NASDAQ lagged ahead of Nvidia’s earnings release. This led to a shift from technology stocks towards more economically sensitive sectors, influenced by expectations of potential interest rate cuts.
Tech Stocks Retreat in Anticipation of Nvidia Earnings
Tech-focused Asian markets stepped back as market participants considered Nvidia Corporation’s (NASDAQ:NVDA) impending earnings report. The South Korean KOSPI fell by 0.5%, Japan’s Nikkei 225 lost about 0.3%, and Hong Kong’s Hang Seng index dropped around 0.8%.
As a barometer for the AI sector, Nvidia’s earnings, expected later today, will be scrutinized for insights on strong AI demand, which has driven the stock up nearly 160% so far in 2024.
Stocks directly linked to Nvidia produced mixed results. Taiwan’s TSMC (TW:2330) stayed flat, while Advantest Corp. (TYO:6857) gained nearly 3%. Conversely, South Korea’s SK Hynix Inc (KS:000660) declined by 0.1%, and China’s Semiconductor Manufacturing International Corp (HK:0981) fell more than 13%.
Australian Stocks Decline Amid CPI Data
Australia’s ASX 200 suffered one of the biggest declines in Asia, dropping 0.6% after consumer price index (CPI) data reflected a 3.5% increase for July, surpassing expectations and exceeding the Reserve Bank of Australia’s target range of 2% to 3%. This led to concerns about potential rate hikes.
The underlying CPI also remained high despite a decrease. Broader Asian markets similarly retreated, with China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes down 0.7% and 0.3%, respectively. Sentiment towards China weakened due to Canada’s tariffs affecting the electric vehicle sector.
With fears of a renewed trade war between China and the West, especially following similar tariffs from the U.S. and EU, investor caution grew.
Major Chinese earnings reports are expected later, including from electric vehicle manufacturers BYD Co (HK:1211) and Li Auto (NASDAQ:LI) Inc (HK:2015).
Futures for India’s Nifty 50 index indicated a muted opening, facing resistance after surpassing the 25,000 points mark.
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