In Thursday's trading, Asian equities took a downward turn, mirroring the subdued sentiment on Wall Street that was sparked by Nvidia Corp.'s underwhelming revenue forecast. Simultaneously, Bitcoin achieved a new record, highlighting the evolving landscape of the digital-asset industry.

Navigating the Turbulent Waters of Asian Equities and Bitcoin

Impact of Nvidia's Earnings Outlook

Shares in Japan, China, Hong Kong, and Taiwan witnessed a decline. In Asian trading on Thursday, contracts for US benchmarks continued to slide following Nvidia's reporting of third-quarter revenue and earnings that met expectations but failed to meet the highest projections for future revenue. The ripple effects of Nvidia's earnings outlook are likely to extend across its suppliers and global markets due to the company's significant size and its crucial role in the artificial intelligence boom. Amy Xie Patrick, the head of income strategies for Pendal Group, expressed her sentiment on Bloomberg Television, stating, "I have a feeling we've reached peak Nvidia. This is a stock that beat analyst estimates but didn't beat enough."

Such a situation has implications for the broader market, as investors closely monitor the performance of key players like Nvidia and its impact on various sectors. The uncertainty surrounding future revenue forecasts has led to a cautious approach among traders, who are now assessing the potential fallout from the US indictment of Gautam Adani and awaiting the nomination of President-elect Donald Trump's Treasury secretary.

Adani Group's Indictment and Its Consequences

The US indictment of Gautam Adani had a significant impact on the market. Dollar-denominated notes issued by the Adani Group fell by as much as 10 cents on the dollar on Thursday. Additionally, the Adani Group's renewable units had to scrap a $600 million bond offering in the wake of these charges. A gauge of Asia's semiconductor stocks also slid by as much as 1%, reflecting the overall market unease.

This incident serves as a reminder of the interconnectedness of global markets and the potential for legal and regulatory issues to disrupt financial stability. Traders are closely watching how these developments will unfold and how they will affect different asset classes.

Other Market Movements

Treasury yields initially edged higher on Thursday but later slipped after a 20-year US government debt auction showed lukewarm demand. An index of the dollar also edged down after gaining on Wednesday due to geopolitical tensions, with Ukraine using British cruise missiles against Russian targets for the first time during the conflict.

In the cryptocurrency space, Bitcoin set another all-time high, supported by a series of developments highlighting the deepening embrace of the digital-asset industry in the US under crypto cheerleader Trump. The world's largest cryptocurrency is rapidly approaching $100,000, with MicroStrategy Inc.'s massive purchases playing a significant role.

Central Bank and Policy Perspectives

Federal Reserve Bank of Boston President Susan Collins emphasized the need for more interest-rate cuts but cautioned policymakers to proceed carefully to avoid moving too quickly or too slowly. Swaps market pricing indicated a less than 50% chance of the Fed cutting rates again in December. Traders are closely monitoring Trump's administration picks, particularly his selection for the Treasury secretary role. Former Federal Reserve Governor Kevin Warsh and Apollo Global Management's Marc Rowan are among the contenders, while Trump tapped Cantor Fitzgerald LP Chief Executive Officer Howard Lutnick to lead the Commerce Department, a crucial role in facilitating his tariff and trade policies.

Ed Mills, the Washington policy analyst at Raymond James, highlighted the importance of understanding the relationship between the Treasury secretary and the Federal Reserve, as monetary policy will play a significant role in shaping the economic landscape.

Key Events and Market Indicators

This week is filled with important events. On Thursday, Eurozone consumer confidence data will be released, along with US existing home sales, initial jobless claims, and the Philadelphia Fed factory index. On Friday, Eurozone HCOB Manufacturing & Services PMI and US University of Michigan consumer sentiment, along with S&P Global Manufacturing & Services PMI, will be reported.

In the markets, S&P 500 futures fell 0.3% as of 10:12 a.m. Tokyo time. Hang Seng futures declined 0.5%, Japan's Topix fell 0.2%, Australia's S&P/ASX 200 was little changed, and Euro Stoxx 50 futures were also little changed. In terms of currencies, the Bloomberg Dollar Spot Index fell 0.1%. The euro was little changed at $1.0547, the Japanese yen rose 0.3% to 154.93 per dollar, and the offshore yuan was little changed at 7.2494 per dollar. In the cryptocurrency space, Bitcoin rose 0.4% to $94,804.14, and Ether rose 0.1% to $3,083.63. In the bond market, the yield on 10-year Treasuries declined one basis point to 4.40%, Japan's 10-year yield advanced 1.5 basis points to 1.080%, and Australia's 10-year yield advanced two basis points to 4.58%. In commodities, West Texas Intermediate crude rose 0.4% to $69.03 a barrel, and spot gold rose 0.2% to $2,655.93 an ounce.

This story was produced with the assistance of Bloomberg Automation.©2024 Bloomberg L.P.