Asian markets showed a mixed performance on Wednesday morning, recovering from the previous day’s broad losses. The focus shifted from the political pressure on the US central bank to the eagerly awaited earnings report of AI giant Nvidia.
On Tuesday, major indices in Tokyo, Hong Kong, Seoul, and other parts of the continent experienced declines. However, Wall Street managed to make modest gains as investors attempted to look beyond US President Donald Trump’s move to oust Federal Reserve governor Lisa Cook. In Europe, shares fell, with the Paris stock market being particularly affected by fears that France’s minority government could be toppled due to a proposed confidence vote over budget cuts.
During Wednesday’s Asian trading session, key benchmarks in Hong Kong, Sydney, and Taipei saw narrow gains. In contrast, Tokyo and Seoul remained flat, while Shanghai and Bangkok experienced declines. Nvidia, the California-based AI chip giant, is set to report its second-quarter financial results on Wednesday evening. The report is being closely watched as a bellwether for the industry, especially amidst growing concerns about a potential tech bubble.
According to Stephen Innes of SPI Asset Management, Nvidia has become a significant indicator for the market. Analysts expect the company’s revenue to soar by 53% to $46 billion. However, the focus is not just on revenue; investors are seeking reassurance that the AI revolution is more than just hype.
The unusual move by Trump to fire a Federal Reserve governor has significantly impacted markets this week. The US leader cited allegations of false statements on Cook’s mortgage agreements, but she argued that Trump had no authority to fire her. This step has added to fears about the independence of the central bank, fueled by Trump’s repeated demands for Fed chairman Jerome Powell to lower interest rates.
Powell suggested that more cuts to US interest rates are on the horizon, causing markets to surge. Investors are now awaiting a US economic growth update on Thursday and a key inflation gauge on Friday for clues on how far interest rates might fall in the coming months. Oil prices continued their slow decline, tracking a possible peace deal to end the war between Ukraine and key crude producer Russia.
Key market figures as of 0215 GMT included the Tokyo Nikkei 225 remaining flat at 42,408.10, the Hong Kong Hang Seng Index rising 0.2% to 25,586.68, and the Shanghai Composite falling 0.2% to 3,862.55. The euro/dollar and pound/dollar exchange rates experienced declines, while the dollar/yen exchange rate saw an increase.
The upcoming Nvidia earnings report and the developments in the US central bank are being closely watched by investors, who are seeking clarity on the future of the tech industry and the direction of interest rates. As the global economy continues to evolve, these factors will play a significant role in shaping market trends in the coming months.
