London (AFP) – Stock markets diverged Wednesday as traders nervously awaited earnings from US tech darling Nvidia, in addition to minutes from the Federal Reserve that could shed fresh light on the outlook for interest rates.
Wall Street shares fell at the opening bell, with downbeat guidance from other tech companies dampening the mood ahead of Nvidia’s earnings release, due after the US market closes.
In Europe, London was dragged lower by top faller HSBC, whose share price dived more than eight percent after the banking giant revealed a shock $3-billion impairment on Chinese activities. In the eurozone, the Frankfurt and Paris stock markets edged higher in afternoon deals.
Hong Kong and Shanghai bourses jumped after Beijing’s latest measures to boost China’s stuttering economy, but Wall Street declines Tuesday weighed on other Asian indices.
World oil prices wobbled and the dollar was relatively steady against its major rival currencies.
“Markets remained skittish ahead of two major events that could have a significant influence over the direction of equities in the coming weeks,” said Danni Hewson, head of financial analysis at stockbroker AJ Bell.
She added that the Fed minutes and Nvidia results “have the power to move the dial for investor sentiment”.
On Thursday meanwhile, the European Central Bank publishes minutes from its most recent meeting on eurozone monetary policy. The Fed and ECB releases will be closely examined for clues on when the pair could start cutting interest rates as inflation cools.
On the company front, traders are looking to see if Nvidia can meet high growth expectations thanks to fast uptake of artificial intelligence.
Briefing.com analyst Patrick O’Hare pointing to disappointing guidance from Palo Alto Networks, another company that has profited from the rally in tech stocks, which sent its share price down by more than 25 percent at the start of trading.
– ‘Decisive point’ for tech rally?-
“The stock has been a star performer for some time, but failing to live up to the high growth expectations has created some nervous energy in front of Nvidia’s earnings report after the close,” he said.
“There is a lot of bullish sentiment (and hefty gains) wrapped up in Nvidia’s stock, so the market’s reaction to the report will be just as important as what the AI leader reports,” added O’Hare.
The group’s stock sank Tuesday on Wall Street, and fell by more than one percent at the opening bell on Wednesday, but it is still up markedly since the beginning of the year, with enthusiasm for AI-related companies having sent its share price rocketing over the past year.
“Nvidia has not said anything yet, and the market is already making big swings,” said SwissQuote analyst Ipek Ozkardeskaya.
“It almost feels like Nvidia earnings could be a decisive moment in the AI rally as many expect the AI bubble to burst at some point.”
Elsewhere, Chinese equities rose Wednesday in what analysts said was a delayed reaction to a cut in local interest rates.
The People’s Bank of China on Tuesday said it was lowering the five-year loan prime rate, used to price mortgages, from 4.2 to 3.95 percent — the largest reduction since the key rate was revamped in 2019.
– Key figures around 1430 GMT –
New York – Dow: DOWN less than 0.1 percent at 38,547.16 points
New York – S&P 500: DOWN 0.2 percent at 4,963.66
New York – Nasdaq Composite: DOWN 0.6 percent at 15,535.19
London – FTSE 100: DOWN 0.8 percent at 7,654.34
Paris – CAC 40: UP less than 0.1 percent at 7,798.13
Frankfurt – DAX: UP 0.2 percent at 17,102.86
EURO STOXX 50: UP 0.2 percent at 4,768.23
Tokyo – Nikkei 225: DOWN 0.3 percent at 38,262.16 (close)
Hong Kong – Hang Seng Index: UP 1.6 percent at 16,503.10 (close)
Shanghai – Composite: UP 1.0 percent at 2,950.96 (close)
Euro/dollar: UNCHANGED from $1.0808 on Tuesday
Dollar/yen: UP at 150.08 yen from 150.01 yen
Pound/dollar: UP at $1.2628 from $1.2623
Euro/pound: DOWN at 85.59 pence from 85.62 pence
Brent North Sea Crude: DOWN less than 0.1 percent at $82.30 per barrel
West Texas Intermediate: UP less than 0.1 percent at $77.07 per barrel
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