Asian stock markets experienced a downturn on Thursday, following a mixed performance on Wall Street. Despite a robust profit report from Nvidia that emerged after U.S. market hours, regional markets did not react positively. Nvidia once again exceeded analysts’ expectations; however, its lower-than-anticipated profit forecasts prompted a decline in technology shares in Tokyo. In after-hours trading, Nvidia’s stock fell by 2.5%.
Japan’s Nikkei 225 dropped by 0.9% during morning trading, settling at 38,001.80. Semiconductor equipment manufacturer Advantest Corp. saw a decrease of 2.7%, while chipmaker Tokyo Electron slipped by 1.5%. Meanwhile, Australia’s S&P/ASX 200 saw a slight decline of approximately 0.2%, concluding at 8,313.50. In contrast, South Korea’s Kospi rose nearly 0.5% to 2,493.91. Hong Kong’s Hang Seng fell by 0.2% to 19,662.49, and the Shanghai Composite similarly lost 0.2%, finishing at 3,361.58.
Stephen Innes, managing partner at SPI Asset Management, commented on the muted response to Nvidia’s results, suggesting it was partly influenced by pre-release positioning. He indicated that the company’s long-term prospects are increasingly complex, questioning what the new benchmarks for Nvidia will be. Innes remarked, “This push to integrate AI into every corner of the corporate world risks backfiring when the technology is forced into roles it isn’t fully equipped to handle.” He also mentioned that trading activity in the options market indicated Nvidia’s earnings report was highly anticipated for 2024, even surpassing the attention on the Federal Reserve’s upcoming interest rate meeting, according to Barclays Capital.
Nvidia has become a significant player in the market, with a valuation nearing $3.6 trillion, thanks to a high demand for its chips utilized in artificial intelligence technology. The rapid growth of Nvidia, which has seen its stock price nearly triple this year, has resulted in increasing pressure for the company to consistently surpass analysts’ high expectations.
On Wall Street, the S&P 500 closed nearly flat at 5,917.11, recovering from an earlier loss. The Dow Jones Industrial Average managed to gain 0.3%, finishing at 43,408.47, while the Nasdaq saw a minor decrease of 0.1%, closing at 18,966.14. A significant decline in U.S. retailer Target’s stock, which fell by 21.4%, followed disappointing profit and revenue reports for the most recent quarter. Additionally, Target provided a profit forecast for the upcoming holiday season that fell short of analysts’ expectations.
Conversely, Walmart released its own optimistic quarterly results on Tuesday, projecting another strong performance for the holiday season. There is heightened scrutiny on consumer spending in the U.S., as these expenditures will play a crucial role in determining whether the economy can maintain growth and avert a recession, all while consumers face rising prices and sustained high interest rates.
JJ Kinahan, CEO of IG North America, found the earnings reports from both Target and Walmart notable, remarking on the typical pattern observed during economic downturns, where consumers tend to shift their spending from more premium stores like Target to more budget-friendly options such as Walmart.
In market activity, Comcast shares rose by 1.6% following the announcement of a new spinoff for USA, CNBC, MSNBC, and other networks, creating a stand-alone entity that will trade independently in the stock market. Overall, the S&P 500 added a negligible 0.13 points, with the Dow gaining 139.53 points, and the Nasdaq dipping by 21.32 points.
Additionally, financial markets are still adjusting to the aftermath of Donald Trump’s recent presidential election victory, with expectations that his administration’s policies could accelerate economic growth and inflation in the U.S. Treasury yields remained relatively steady, with the 10-year yield climbing to 4.41% from 4.40% late Tuesday, having increased from below 3.70% in September.
In other markets early Thursday, U.S. crude oil prices rose by 17 cents to $68.92 a barrel, while Brent crude gained 18 cents to $72.99 per barrel. In currency exchanges, the U.S. dollar fell to 155.05 Japanese yen, down from 155.31 yen, and the euro decreased slightly to $1.0551, down from $1.0546.