Asian equities saw broad gains, primarily driven by chipmakers, as a decline in crude oil prices alleviated worries about accelerating inflation. MSCI’s Asia Pacific equities gauge climbed 1%, with major contributions from Samsung Electronics and SK Hynix. This surge followed advances in US chip stocks, including Nvidia, which broke a seven-day losing streak before its earnings report. Investors remained cautious, however, due to upcoming key events such as Nvidia's results, the US Personal Consumption Expenditures gauge, and Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole.
Crude oil prices continued their descent, with Brent falling 2.6% to approximately $86.25 a barrel, as discussions between Iran and Oman hinted at a potential resumption of shipping through the Strait of Hormuz. The 8.5% drop in crude prices over the week provided relief to markets, boosting government bonds globally. Treasuries held gains, and bonds in Japan and New Zealand advanced, though Australian bonds reversed earlier gains after an inflation report suggested a potential interest rate hike.
Nvidia’s earnings were a major focus, with analysts estimating its revenue nearly doubled to $92 billion last quarter, surpassing many rivals' annual figures. Despite the company's strong performance, the AI sector has faced scrutiny over whether its significant investments will yield proportional returns. After the close of regular trading, Nvidia's shares fluctuated, falling after a sales forecast of $108 billion (plus or minus 2%) for the current period, which, while above analysts' average estimate of $105.2 billion, fell short of some higher projections. This reaction contributed to volatility in broader markets and a slight dip in the S&P 500 post-earnings.
Investors are also closely monitoring Federal Reserve Chair Kevin Warsh's upcoming speech at the Jackson Hole Symposium for indications on monetary policy direction, especially as core personal consumption expenditures (PCE) price index advanced 3.3% in July, remaining above the Fed's target. The market is in a holding pattern, balancing eased geopolitical risks and lower oil prices against anticipation for major economic data and central bank guidance. The South Korean Won strengthened, hitting an 11-month low against the US Dollar, due to consecutive interest rate hikes by the Bank of Korea.
