By Marc Jones and Gregor Stuart Hunter
LONDON/SINGAPORE (Reuters) -Wall Street was set to join a world stock market relief rally on Thursday as investors cheered AI chip giant Nvidia’s forecast-topping earnings, although they were also bracing for key U.S. jobs data delayed by the recent U.S. government shutdown.
Asia’s tech-heavy markets led the rally and Europe’s top bourses snapped a five-day losing streak [.EU] after Nvidia CEO Jensen Huang shrugged off AI bubble concerns and touted blockbuster demand for its high-tech chips. [.EU]
The remarks, which had Nvidia’s shares pointing 5% higher [.N], were backed by the world’s most valuable company forecasting quarterly revenue well above Wall Street estimates, quelling some of the AI valuation fears that led to a $3 trillion pullback in global share markets in recent sessions.
“It’s fair to say that Nvidia’s results have completely changed the market mood and pushed out any bubble fears for another day,” Deutsche Bank strategist Jim Reid said.
Nasdaq and S&P 500 futures were up 1.8% and 1.3% respectively, after Wall Street snapped a four-day losing streak on Wednesday before Nvidia’s earnings release. [.N]
Europe’s gains cooled slightly as the day progressed, but its tech indexes were still up over 1% as the likes of Infineon and ASML, and AI equipment makers Schneider Electric and Siemens Energy, led the charge. [.EU]
Asia saw Tokyo’s Nikkei 225 finish up 2.6%, Korean stocks jump 1.9%, and Taiwan rally 3.2% as its big chipmaker TSMC leapt more than 4%.
The rebound was given additional impetus by a Reuters report that the U.S. might delay long-promised semiconductor tariffs to help ease tensions with China.
YEN STIMULUS STRESS
Currency and bond markets were moved by news that Japanese Prime Minister Sanae Takaichi’s administration is reportedly preparing to pass a stimulus package that would be the country’s biggest since the COVID-19 pandemic.
Japanese government bonds sold off sharply, with yields surging to record highs. The yen sagged to 157.60 per dollar, its weakest in ten months, having also just set a record low against the euro. [/FRX]
The currency has weakened steadily since Takaichi was elected leader of her party, losing more than 6% of its value on unease about the scale of borrowing needed to fund her stimulus plans.
“It is going to be a crucial session going into the weekend to see if they (Japanese policymakers) can stop the bleeding here,” Saxo Bank’s FX strategist John Hardy said, likening the situation to the “ugly” rout on the pound in 2022 when the then Liz Truss government floated an unfunded spending drive.
The U.S. dollar index, which tracks the greenback’s strength against a basket of six major peers, advanced 0.1% to 100.33, hovering close to a six-month high.
The yield on benchmark 10-year Treasury notes edged up 1.1 basis points to 4.14%, compared with its U.S. close of 4.13% on Wednesday.
DELAYED JOBS DATA
Traders are now awaiting the release of September’s delayed U.S. jobs report, due at 8:30 a.m. ET/1330 GMT, to provide clues on the Federal Reserve’s next move.
Minutes from the Fed’s October meeting released on Wednesday showed it cut interest rates even as policymakers cautioned that doing so could risk entrenched inflation and a loss of public trust in the central bank.
Fed funds futures are pricing an implied 33% probability of a 25-basis-point cut at the next meeting on December 10, down from a 50% chance a day earlier, according to the CME Group’s FedWatch tool.
An updated schedule for the release of the November jobs report, now delayed until December 16, is behind the move, said Gavin Friend, senior markets strategist at National Australia Bank in London.
“That’s six days after the December FOMC meeting, and that’s why the 12 or 13 basis points of rate cuts that were priced in for December, 50% or so, has been immediately evaporated,” he said on a podcast. From the market’s perspective, he said, the data fog “plays to the Fed’s messaging that ‘we need to pause’.”
Against the dollar, the euro was 0.2% weaker on the day at $1.1520, while in commodity markets Brent crude rose 1% to $63.6 per barrel, having fallen over 2% on Wednesday as markets assessed the latest U.S. proposals to end the war in Ukraine and prepared for a U.S. deadline to cease operations with two major Russian oil firms.
Cryptocurrencies retraced some of their recent heavy selloffs too, with bitcoin up 1.4% at just under $92,200 and ether 1.5% higher at $3,033.
Precious metals markets were choppy, with spot gold last up 0.3% at $4,092 an ounce after earlier dipping as much as 0.4%. [GOL/]
(Reporting by Marc Jones. Editing by Saad Sayeed and Mark Potter)
