Asian shares edged higher on Wednesday as anxious investors dared to hope AI-diva Nvidia could meet sky-high expectations, while keeping a wary eye on the outlook for US and UK interest rates.
New Zealand’s central bank offered a sobering assessment of its inflation problems, warning that rates would have to be higher for longer to bring them to heel in a shock to local markets.
That saw the kiwi dollar jump 0.9 per cent to a one-month high of $US0.6151 as bond yields spiked.
MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.4 per cent, having already climbed for four straight weeks to reach a two-year top.
Japan’s Nikkei eased 0.6 per cent as data showed a weak yen was boosting exports but also stoking imported inflation and weighing on business sentiment.
EUROSTOXX 50 futures and FTSE futures both inched up 0.2 per cent. S&P 500 futures and Nasdaq futures were both a fraction firmer.
Markets are braced for fireworks when Nvidia reports after the bell, with options priced for a swing of 8.7 per cent in either direction, worth $US200 billion in market value.
Analysts wonder how much more it can deliver given that the chip-maker already boasts a profit margin of 77 per cent, and its stock is up 93 per cent on the year so far.
“Sentiment is quite positive, with our bars well-above consensus and a sense that management has left some in the tank to surprise positively,” said JPMorgan analyst Josh Meyers.
“This suggests that it may take a big upside surprise, on earnings or clearer forward guidance, to get the stock moving any higher.”
Minutes of the US Federal Reserve’s last meeting due later in the day should confirm the next move is still likely down, but policy makers first need more confidence that inflation has resumed its downtrend.
Fed fund futures imply about a 66 per cent chance of a rate cut by September and have 43 basis points of easing priced in for this year.
Figures on UK inflation due later in the session could decide whether the Bank of England eases as early as June, or waits to August.
Forecasts are for core consumer price inflation to slow to 3.6 per cent in April, from 4.2 per cent in March, and anything lower would narrow the odds on a June cut and likely pressure sterling.
The UK pound was holding just short of two-month highs at $US1.2712, while the euro was trading steady at $US1.0857 , just off its recent top of $US1.0895.
The US dollar flatlined on the yen at 156.20 as the threat of Japanese intervention stalled its advance.
Gold held firm at $US2,424 an ounce, after touching a record high of $US2,449.89 early in the week.
Oil prices slipped amid concerns over the peak US driving season, given that demand was seasonally tracking at its lowest since 2020 and retail prices had fallen for four weeks in a row.
Brent crude fell 50 cents to $US82.38 a barrel, and the spread over futures narrowed further, while US crude lost 54 cents to $US78.12 per barrel.
This post was originally published on Michael West.