Source: AFP
A selloff in tech companies dragged Asian markets lower on Thursday after investors were disappointed by earnings from chip titan Nvidia that fueled concerns about the outlook for all things artificial intelligence.
While the report beat expectations in many sectors, it took the wind out of the sails for traders, who were relishing the prospect of a rate cut in the US from next month.
Investors have been eagerly awaiting the launch from California-based Nvidia, which has become a bellwether for the tech sector because of its huge role in developing artificial intelligence chips.
Analysts had warned ahead of the event that even a forecast-busting metric might not be enough to satisfy markets, which are used to outsized earnings and revenue.
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Nvidia’s share price is up about 160 percent year-to-date and has accounted for a third of the broad-based S&P 500’s gains this year.
The company — now with a market capitalization of more than $3 trillion — said revenue and profit more than doubled in the fiscal second quarter, while it announced an additional $50 billion in share buybacks.
However, sales growth was slower than the frenetic pace seen in previous quarters.
Traders were also spooked by entanglements in the company’s new generation of Blackwell technology, the successor to the best-selling Hopper line of artificial intelligence chips that propelled the company onto the global stage.
Nvidia’s share price fell more than eight percent in after-hours trading. All three major indexes on Wall Street fell ahead of the release, which came after the market closed.
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In Asia, technology was among the worst performers, with chipmakers taking a hit. SK hynix fell more than five percent in Seoul, where Samsung also fell nearly 3 percent.
Taipei-listed TSMC, a key semiconductor maker, sank more than two percent and Tokyo Electron fell more than one percent in Tokyo.
This weighed on the broader markets, with Hong Kong, Tokyo, Shanghai, Seoul, Singapore, Taipei, Manila and Wellington all in the red.
“As the bellwether for the technology industry, which now touches almost every aspect of global business and our daily lives, Nvidia’s performance is scrutinized like a crystal ball for the broader market and the US economy,” said independent analyst Stephen Innes.
“So when this flagship takes a hit, it has the potential to take the entire fleet down with it.
“Nvidia continues its momentum, defying gravity for the seventh consecutive quarter, beating expectations on both the top and bottom lines. But in the choppy world of trading after the reports, even a solid earnings decline wasn’t enough to keep investors smiling.”
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Attention now turns back to the US economy, with data this week and next likely to play a role in how far the Federal Reserve goes in cutting interest rates.
Boss Jerome Powell said on Friday that they should start to fall as the labor market tightens and inflation eases, but he gave no guidance on how big the expected cut would be in September.
Readings on gross domestic product, jobless claims and personal consumer spending — the Fed’s favored gauge of inflation — are among this week’s readings, while the crucial nonfarm payrolls report is due next Friday.
Below-forecast results in these could confirm the case for a half-percentage-point decline, twice what is currently expected.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 0.4 percent at 38,220.34 (break)
Hong Kong – Hang Seng Index: DOWN 0.8 percent at 17,555.37
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Shanghai Composite: DOWN 0.7 percent at 2,817.63
Dollar/yen: UP to 144.60 yen from 144.50 yen on Wednesday
EUR/USD: UP at $1.1129 from $1.1119
GBP/USD: UP at $1.3205 from $1.3194
Euro/pound: UP at 84.29 pence from 84.27 pence
West Texas Intermediate: UP 0.2% to $74.67 a barrel
North Sea Brent crude: UP 0.1 percent at $78.75 a barrel
New York – Dow: DOWN 0.4 percent at 41,091.42 (close)
London – FTSE 100: FLAT at 8,343.85 (close)
Source: AFP
