South Korea’s Kospi Index slid more than 1% as chipmakers Samsung Electronics Co. and SK Hynix Inc. slumped. Japanese shares also opened lower. Futures on the Nasdaq 100 Index were down 1% in Asia as Nvidia slumped more than 8% in post-market trading following a sales forecast that disappointed some on Wall Street.
The outlook threatened to cool an AI frenzy that has transformed Nvidia into the world’s second-most-valuable company. The chipmaker is the key beneficiary of a race to upgrade data centers to handle AI software, and its sales forecasts have become a barometer for that spending boom.
“Nvidia’s strong results and guidance failed to impress markets, primarily because of expectations and not underperformance,” said Charu Chanana, head of currency strategy at Saxo Markets. “This disappointment can filter through to Asian tech space today but there is little reason to expect any derailment in AI developments or in Nvidia remaining a backbone of AI development and deployment.”
The S&P 500 at one point headed toward its worst drop since the Aug. 5 meltdown. The gauge pushed away from that threshold, closing down 0.6%. Wall Street’s favorite volatility gauge — the VIX — surged to around 17. Treasury 10-year yields steadied after rising one basis point to 3.84% in the previous session. The dollar was little changed after gaining broadly amid speculation investors were buying the US currency for portfolio re-balancing. In Asia, investors will be keeping a close eye on Chinese equities after the benchmark CSI 300 fell to its lowest since February on Wednesday amid a sputtering economy. UBS Group AG downgraded its forecast for the nation’s growth for this year and the next, citing a deeper-than-expected property market slump.Chinese companies delivered a mixed set of earnings, though any surprises are unlikely to ease concern over what’s so far been a dismal season for consumer-oriented companies. EV giant BYD posted a 33% jump in profit while peer Li Auto Inc. missed forecasts. Meituan reported better-than-expected revenue.
Elsewhere, Nippon Steel Corp. plans to invest an additional $1.3 billion at plants operated by United States Steel Corp. as the Japanese company steps up efforts to secure union support for a takeover bid that’s been opposed by both President Joe Biden and Donald Trump.
Bar Too High?
While Nvidia’s guidance underwhelmed, revenue more than doubled to $30 billion in the fiscal second quarter, which ended July 28. And the Santa Clara, California-based company’s board approved an additional $50 billion in stock buybacks.
Later Thursday, investors will shift focus to key US data including a growth reading, personal consumption and weekly jobless claims to help firm bets the Federal Reserve will quickly ease policy this year. Fed Bank of Atlanta President Raphael Bostic said it “may be time to cut” but he’s still looking for additional data to support lowering interest rates next month.
In commodities, oil steadied after a two-day drop, as technical barriers stymied gains from a decline in US stockpiles and disruptions to Libyan production. Gold recouped some of Wednesday’s loss in early trading.