Asian Stocks Set to Rebound Ahead of Nvidia Result: Markets Wrap
Asian equities are poised to rebound from Tuesday’s losses, tracking modest gains in US stocks ahead of Nvidia Corp.’s results. The and longer-dated Treasuries declined following President Donald Trump ’s push to oust Federal Reserve Governor Lisa Cook .
Futures signaled gains in Sydney, Tokyo and Hong Kong after the S&P 500 rose 0.4%, led by Nvidia before the tech giant’s hotly-anticipated earnings report on Wednesday. US contracts edged higher in early Asia hours.
While moves in the dollar and bonds were subdued on Tuesday in thin trading — with a gauge of the slipping 0.2% — they highlighted mounting concern over political meddling in monetary policy.
The slide in 30-year Treasuries followed losses in longer-dated debt from France and the UK, extending a drop that’s been driven by concerns about inflation and ballooning budget deficits. A solid $69 billion sale of two-year notes added to gains in short-dated maturities. The gap between five and 30-year yields is the steepest since 2021.
Trump said he was prepared for a legal fight after he moved to oust Cook amid allegations she falsified mortgage documents. The Fed, weighing in for the first time this week, said it would abide by any court decision in Cook’s legal challenge of her dismissal by the president.
“Trump’s push to fire Cook has exacerbated concerns about the Fed’s independence,” said Ian Lyngen at BMO Capital Markets. “While the price action in US rates has been largely contained to the recent range, many of the go-to hedges against an erosion of Fed independence outperformed on the news of Cook’s firing.”
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Even as political headlines flare, investors remain anchored to a bullish market script: a likely September rate cut , resilient economic growth , and corporate earnings strong enough to keep equity sentiment afloat.
“An independent Fed remains the dominant framework,” said Dennis DeBusschere at 22V Research. “There is no reason to go against that yet, but hedges are important.”
The Fed’s perceived independence from government whims is a bedrock assumption of US markets, and any change to that perception could weigh on US credit ratings.
“This issue is likely to get kicked to the courts for resolution,” said Brad Bechtel at Jefferies. “If it does go through, then clearly Trump has another seat to fill and that should then tip the board in his favor from a political alignment perspective.”
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Economic data Tuesday showed increased in July by more than projected, suggesting companies are moving forward on investment plans as uncertainty around trade and tax policy gradually diminishes. Meantime, fell slightly in August as Americans worried more about their prospects of finding a job.
“Consumers don’t appear afraid, but perhaps restrained,” said Bret Kenwell at eToro. “Corporate conference calls reveal what appears to be a resilient consumer, while retail sales echo similar reassurances.”
As investors fret over signs of a slowing economy and lofty stock-market valuations, they are getting a bit of .
Nvidia’s earnings report is expected to give an update on the artificial intelligence spending boom — and how the US-China rivalry is limiting growth. Analysts estimate that the biggest buyers of AI hardware are still investing heavily in new gear, with the company’s sales set to grow at a pace of more than 50% this year.
Meantime, volatility has vanished. Now , shorting the Cboe Volatility Index, or VIX, at rates not seen in three years. But such eerie calm and extreme positioning has historically foreshadowed a spike in turbulence and stock losses.
Hedge funds and large speculators were net short futures tied to the VIX by roughly 92,786 contracts in the week through Aug. 19 — a level last seen in September 2022, data from the Commodity Futures Trading Commission show.
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This story was produced with the assistance of Bloomberg Automation.
