By Lawrence White
LONDON (Reuters) -Stocks and bond yields held firm on Monday, as markets paused for breath after a wobble in tech stocks last week that could resume or reverse when $5 trillion chipmaker Nvidia reports earnings on Wednesday.
Investors also await headline U.S. jobs data due on Thursday, albeit the report may do little more than confirm earlier private market surveys showing the labour market had slowed.
Europe’s benchmark index of 600 big stocks rose 0.1% in subdued trading Monday morning, with Wall Street looking set to follow the steady mood as S&P 500 futures ticked 0.6% higher and Nasdaq 100 futures rose 1%.
Expectations for a U.S. interest rate cut in December have fallen to less than 50% following policymakers sounding hesitant. That has started to put pressure on stocks, especially in the frothy and rates-sensitive technology sector.
CHINA-JAPAN TENSION SINKS ASIA STOCKS
In Asia trade, Japan’s Nikkei dipped 0.2% with tourism and retail stocks down heavily after China cautioned citizens against visiting Japan.
Shares in department store operator Isetan Mitsukoshi, Muji parent Ryohin Keikaku and cosmetics maker Shiseido notched declines of around 10%.
In Australia, a 0.6% fall for BHP after Britain’s high court found it liable for a dam collapse in Brazil held the bourse flat. Hong Kong and China indexes each fell by about 1%.
Data showed Japan’s economy contracted for the first time in six quarters due to a hit from U.S. tariffs. However, it was a Nikkei report on a $110 billion stimulus spending plan that weighed on bonds and sent 20-year yields to a 26-year high of 2.75%.[JP/]
Some analysts see risks to the yen, too, if faith in fiscal discipline is shaken, much as it was in Britain last week when stocks, bonds and sterling tumbled on reports finance minister Rachel Reeves was backing away from tax hikes. [GB/]
Ten-year U.S. Treasury yields were steady at 4.1347% and Germany’s 10-year, the benchmark for the euro zone, likewise held firm at 2.715% after touching its joint-highest since October 7 at 2.718%.
Wall Street indexes had on Friday recovered from a steep selloff to notch a mixed close, with a small drop for the S&P 500 and modest gain for the Nasdaq.
NVIDIA EARNINGS, US JOBS SLOWDOWN IN FOCUS
The headline U.S. data release this week will be Thursday’s delayed September jobs report.
The figures may be too stale to be of much use, since private surveys have already flagged a labour market slowdown.
“If all it does is confirm that, it’s not going to change the tune of the more hawkish Fed officials. They are more worried about inflation upside risks, so CPI data for them will be critical,” said ANZ’s head of research in Asia, Khoon Goh.
On Friday, rate cut expectations cooled when Kansas City Fed President Jeffrey Schmid and Dallas Fed President Lorie Logan cast doubt on the need to cut next month.
Home Depot, Target, Walmart and Nvidia report earnings in the U.S. this week and all eyes are on the chipmaker, where the market’s response is shaping as a test of the sparkling rally.
Nvidia shares have soared about 1,000% since the launch of ChatGPT in November 2022. This includes a year-to-date gain of more than 40% that made Nvidia the first company to surpass $5 trillion in market value last month.
In foreign exchange, the U.S. dollar was up slightly, holding the euro just below $1.16 and creeping higher on other majors.
Gold edged down to $4,072 an ounce, albeit the precious metal has soared 55% this year from a price of $2,624 an ounce on January 1 as safe-haven demand, geopolitical tensions and expectations of lower rates burnished its appeal.
Brent crude futures slipped 0.64% to $63.98 as loading resumed at a Russian hub hit previously by a Ukrainian attack.[O/R]
Bitcoin, which has lately behaved as a barometer of the mood on technology stocks, is nursing its largest weekly fall since March, having lost more than 10% last week. It traded up 2% on Monday at $95,517.
(Reporting by Lawrence White in London and Tom Westbrook in Singapore; Editing by Jamie Freed and Christopher Cushing)
