Asian stocks set to gain as oil extends losses; Nvidia earnings in focus

ASIAN STOCKS were set to advance on Wednesday (Aug 26) as falling oil prices eased inflation concerns and pushed bond yields lower, while traders awaited Nvidia’s earnings for fresh clues on the outlook for artificial intelligence.

Equity-index futures for Japan, South Korea and Australia gained after a rebound in chipmakers snapped Nvidia’s seven-day losing streak ahead of its results on Wednesday (Aug 26). Earlier, the Nasdaq 100 Index closed 0.6 per cent higher, while the S&P 500 Index rose 0.3 per cent.

US crude extended its losses, trading around US$81 a barrel, as Iran and Oman discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz. Lower oil prices helped push 10-year Treasury yields down seven basis points to 4.63 per cent on Tuesday, while a gauge of the US dollar’s strength fell.

Gold extended its rally into a sixth day, trading close to US$4,670 an ounce, while Bitcoin held around US$78,900.

The retreat in oil offered some relief to US markets after persistent inflation and elevated yields weighed on risk appetite.

Three key events may shape trading this week – Nvidia’s results on Wednesday for clues on whether the AI rally can regain momentum, the release of the US Personal Consumption Expenditures gauge on Wednesday and US Federal Reserve chair Kevin Warsh’s Jackson Hole speech on Friday for signals on the path of interest rates.

“Although the mountain of event risk is casting a slight shadow over the markets, the easing of geopolitical risks and subsequently lower oil price has been enough to offset the trepidation,” wrote Kyle Rodda, a senior analyst at Capital.com.

In other corners of the market, the Canadian dollar was steady after Canadian Prime Minister Mark Carney matched new tariffs imposed by US President Donald Trump and announced support for businesses hurt by the escalating trade dispute with the country’s largest trading partner.

The US is weighing more trade measures against Canada over the retaliation.

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The main event for equity traders on Wednesday will be Nvidia’s earnings after a spate of strong results failed to prevent investors from selling shares of AI companies. The trade has come under pressure recently as investors question whether the billions of dollars being spent on the technology will generate commensurate returns.

Analysts estimate Nvidia’s revenue nearly doubled from a year earlier to US$92 billion last quarter, more than any of its rivals generate in a full year. The results will offer a key test of whether the AI boom can sustain the earnings expectations underpinning technology valuations.

“Nvidia is operating on all cylinders and they’re doing absolutely everything correctly at this point,” said Mark Malek at Siebert Financial. “We’re anticipating good news here, but so is everybody.”

Attention will then shift to the annual Jackson Hole Symposium on Friday, where Warsh will deliver his first major speech as US Fed chair. Investors will be looking for greater clarity on his assessment of the US economy and the path for monetary policy.

Data on Tuesday showed US consumer confidence fell to a seven-month low in August as the outlook for business conditions and the labour market deteriorated. On Wednesday, investors will turn to the US personal consumption expenditures price index – the US Fed’s preferred inflation gauge.

“Consumers are optimistic about today but increasingly nervous about tomorrow,” said Jeffrey Roach, chief economist at LPL Financial. “Although employment conditions remain solid, fading expectations for income growth may act as a headwind to spending.” BLOOMBERG