Asian stocks struggled for direction without local drivers following the S&P 500 reaching another record high prior to Nvidia Corp.’s earnings report. Japanese shares declined due to a trade deficit, while Australia, Hong Kong, and mainland China traded narrowly. U.S. stock futures were stable in Asian trading after the S&P 500 hit its 24th record of the year. The MSCI Asia Pacific Index fluctuated after breaking a seven-game winning streak. Investors are eager to see if Nvidia can meet the high expectations surrounding artificial intelligence.
The New Zealand dollar surged and government bond yields rose after the Reserve Bank of New Zealand hinted at possible interest rate cuts starting in 2025. The central bank maintained rates for the seventh consecutive meeting, with IG Markets analyst Hebe Chen noting the bank’s hawkish stance on inflation and interest rates.
Treasury markets stabilized as global bonds rebounded, indicating that developed nations are managing inflation well. Federal Reserve Governor Christopher Waller described recent price pressure reports in the U.S. as reassuring. Volatility is expected in the stock market, with strategists at Goldman Sachs pointing to upcoming events such as Nvidia’s earnings report as potential triggers for market movements.
Goldman’s risk appetite measure hit its highest level since 2021, driven by optimism about economic growth and monetary policy. The CBOE Volatility Index options data suggested increased demand for hedging against sudden market declines while volatility remains historically low.
Events to watch this week include the Fed minutes, Nvidia earnings, and key economic data releases. Stock futures for the S&P 500 and Nikkei 225 fluctuated, while Australian, Hong Kong, and Shanghai stocks remained relatively stable. The Bloomberg Dollar Spot Index was flat, and cryptocurrencies like Bitcoin and Ether saw modest gains. Bond yields and commodity prices were mostly unchanged.
Overall, investors are anticipating increased market volatility with upcoming events like Nvidia’s earnings report. While some indicators point to cautious optimism in the market, the possibility of sudden market declines is being hedged against. An upcoming Fed meeting and key economic data releases will likely provide further insight into market trends.
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