Asian stocks hesitant before Nvidia, oil slips on Hormuz hopes
SINGAPORE: Asian stocks stuttered on Wednesday as a drop in oil prices dragged bond yields lower on hopes that the critical Strait of Hormuz could reopen, while investors braced for yet another make-or-break earnings report from AI bellwether Nvidia.
Asian markets showed signs of uncertainty on Wednesday as oil prices dropped, causing bond yields to decline due to hopes that the Strait of Hormuz might reopen. Iran reported a restart of talks with Oman regarding the Strait, amid growing economic pressure from US President Donald Trump following nearly six months of conflict that has shaken oil markets and fueled global inflation concerns.
Brent crude futures tumbled for a third consecutive day, falling over 2% to $86.41 per barrel due to the likelihood of additional supply via the strait, which accounts for one-fifth of the world's traded oil before the war. This led to a decline in bond yields, with the yield on US 10-year notes dropping to 4.634% from 4.634% the previous day.
Despite the lack of substantive progress or specifics on the Iran-Oman deal, markets seemed to anticipate an interim announcement, according to analysts at JP Morgan. Investors, however, became cautious ahead of Nvidia's second-quarter earnings report, which weighed on their focus on whether the AI boom is sustainable and profitable.
MSCI's Asia-Pacific index excluding Japan gained 0.12%, with expectations of a 2% rise for the month. Japan's Nikkei slipped 0.4%, while the tech-heavy KOSPI fell 0.2%. Nasdaq futures declined 0.5%, while European futures remained unchanged. Nvidia is nearing a turning point where beating forecasts is anticipated, so the market reaction may hinge more on the magnitude of the beat and the strength of guidance rather than the headline numbers themselves, according to Charu Chanana, chief investment strategist at Saxo in Singapore.
Options data hints at a modest move following earnings, indicating that Nvidia's results are becoming more predictable.
Analysts project Nvidia to report an 82.8% increase in third-quarter sales to $104.20 billion, with adjusted gross margins expected to stay around 75% for the second and third quarters. JP Morgan analysts believe the earnings release could bolster the AI sector, though it may not provide a significant near-term boost. Meanwhile, US inflation data awaited to provide further clarity.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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