US futures rise but markets await Nvidia, rate signals

US equity futures rose as investors awaited earnings from Nvidia Corp., the chipmaker at the heart of the hype around artificial intelligence.

Europe led a rally in global bonds as signs of a quickening downturn in the euro area prompted traders to trim interest-rate hike bets. Services activity shrank for the first time since the end of last year, ceasing to be a bright spot, while in Germany, overall activity declined at the fastest pace since the first wave of the pandemic in 2020. The euro also tumbled, while the Stoxx 600 stock benchmark pared some gains.

Contracts on US equity gauges rose, with those on the Nasdaq 100 up 0.7%, after stocks fell on Tuesday. Nvidia gained 1.5% in premarket trading before its results due later today. The chipmaker closed lower on Tuesday after briefly touching an all-time high.

Wider markets are also marking time ahead of a speech from Federal Reserve Chair Jerome Powell on Friday at the Jackson Hole Economic Policy Symposium. A resilient US economy has prompted investors to position for the Fed to keep borrowing costs elevated. Treasury yields fell on Wednesday, tracking moves in Europe.

Analysts are predicting that Nvidia’s second-quarter revenue may come in higher than the forecast it gave three months ago. The options market is also bracing for a move of about 10% following the results. 

“The market is in a wait-and-see mode for the main catalysts this week: Nvidia earnings and Jackson Hole,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “Given the strong yield increase since July, the Jackson Hole meeting is of particular interest for investors.”

Investors are looking for clues on the outlook for interest rates, after the Fed last month lifted them to a range of 5.25% to 5.5%, the highest level in 22 years. US PMI figures measuring August activity due later Wednesday will provide insights on the strength of the economy, before Powell’s remarks on Friday. 

“One risk for the Fed of now arriving so close to its inflation target is that the bond market gets ahead of it and re-stimulates the economy with a big shift down in yields,” said Stephen Auth, chief investment officer for equities at Federated Hermes. 

While Powell is unlikely to “surrender the hard-won credibility of the past year with a premature shift back to policy looseness,” it will be difficult for him to appear too hawkish, given inflation is clearly in decline and deflationary pressures are looming from China, Auth added.

In Asia, mainland Chinese stocks were under pressure again despite fresh signs of an earnings recovery among the country’s tech giants.

Elsewhere, oil fell for a third day, ahead of official US stockpile data due later Wednesday.

Key events this week:

• UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
• US new home sales, S&P Global Manufacturing PMI, Wednesday
• US initial jobless claims, durable goods, Thursday
• Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
• Japan Tokyo CPI, Friday
• US University of Michigan consumer sentiment, Friday
• Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday

STOCKS

• The Stoxx Europe 600 rose 0.5% as of 10 a.m. London time
• S&P 500 futures rose 0.5%
• Nasdaq 100 futures rose 0.7%
• Futures on the Dow Jones Industrial Average rose 0.4%
• The MSCI Asia Pacific Index rose 0.4%
• The MSCI Emerging Markets Index rose 0.1%

CURRENCIES

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.2% to $1.0819
• The Japanese yen rose 0.4% to 145.36 per dollar
• The offshore yuan was little changed at 7.3001 per dollar
• The British pound fell 0.4% to $1.2676

CRYPTOCURRENCIES

• Bitcoin rose 0.7% to $26,030.11
• Ether rose 0.9% to $1,644.41

BONDS

• The yield on 10-year Treasuries declined six basis points to 4.26%
• Germany’s 10-year yield declined 11 basis points to 2.54%
• Britain’s 10-year yield declined 12 basis points to 4.53%

Commodities

• Brent crude fell 0.4% to $83.69 a barrel
• Spot gold rose 0.3% to $1,903.80 an ounce

This story was produced with the assistance of Bloomberg Automation.