The offices of Standard & Poor's in New York, New York, US, on 8 December 2011. (Photo: EPA / Justin Lane) Shares in Japan slipped as the country reported a trade deficit, while those in Australia, Hong Kong and mainland China edged higher. US futures were little changed in Asian trading after the S&P 500 saw its 24th record this year.
The MSCI Asia Pacific index swung between gains and losses after it snapped a seven-session win streak Tuesday. Investors are waiting to see if Nvidia, the poster child of artificial intelligence, will be able to match the sky-high expectations surrounding the technology. Central bank events are also in focus for cues on the direction of global rates.
“Asian markets show waning optimism as investors await direction from the next catalyst while digesting mixed local data,” said Hebe Chen, an analyst at IG Markets. “Japan’s market takes a back foot today amid lacklustre trading data,” she added.
The New Zealand dollar jumped and government bond yields rose after the Reserve Bank of New Zealand held rates steady on Wednesday, but signalled interest rate cuts may start later in 2025. Elsewhere, Indonesia’s central bank is expected to stand pat, while the minutes of the Federal Reserve’s latest meeting will also be released later in the day.
Treasuries steadied after global bonds rallied on the latest sign that developed nations are finally getting a grip on inflation as Fed Governor Christopher Waller said the recent report on US price pressures was “a reassuring signal.” A Bloomberg gauge of dollar strength was little changed.
Trading in Asia will likely be quieter with Singapore closed for a holiday. Gold, silver and copper consolidated near recent highs, while oil extended losses after an industry report showed a jump in stockpiles.
Volatility awaits
Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs strategists.
The Santa Clara, California-based company — whose shares have soared over 90% this year after more than tripling in 2023 — is expected to report revenue buoyed by soaring demand in its data-centre business.
Goldman’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote.
The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.
For Morgan Stanley’s Andrew Slimmon, there’s still plenty of room for the market to extend its gains from all-time highs.
Low expectations for equities and the preference for a 5% to 6% yield from Treasury bills suggests that markets are still in the “fear” part of the current cycle, the senior portfolio manager at the bank’s investment management arm said on Tuesday.