Asian equity markets saw declines on Thursday, driven by disappointment in Nvidia’s earnings forecast and ongoing geopolitical concerns stemming from the escalating conflict in Ukraine.
While the dollar strengthened and safe-haven assets like gold and government bonds saw increased demand, investors grappled with mixed market signals, including a record high for Bitcoin fueled by optimism over U.S. economic policies.
At the center of market attention was Nvidia, the world’s most valuable semiconductor firm and a key player in the AI revolution. The company’s earnings report for the third quarter showcased strong revenue growth of 94%, reflecting continued robust demand for its AI chips, which dominate the market.
However, Nvidia’s guidance for the fourth quarter dampened enthusiasm. The company projected revenue growth to slow to approximately 69.5%, marking its weakest pace in seven quarters.
The slower growth forecast disappointed markets, which had placed exceptionally high expectations on Nvidia’s performance. George Boubouras, head of research at Melbourne-based K2 Asset Management, remarked, “While they delivered impressive revenue growth and momentum, the market clearly wants more.”
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Despite the tempered outlook, some analysts remain optimistic about Nvidia’s long-term potential. Charu Chanana, chief investment strategist at Saxo, noted, “Momentum in AI is only growing, with supplies being the bigger headwind rather than demand. The structural AI tailwind could continue to be a key driver for equities into the next year.”
Nvidia’s forecast sent ripples through global markets. Nasdaq futures declined by 0.31%, while S&P 500 futures eased 0.21%. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.46%, with technology-heavy Taiwan stocks falling 0.58%. Japan’s Nikkei experienced a sharper decline of 0.8%.
Meanwhile, in Europe, futures signaled a slightly more optimistic start, with Eurostoxx 50 futures up 0.13%, German DAX futures climbing 0.33%, and FTSE futures gaining 0.31%.
The escalating conflict in Ukraine also weighed heavily on investor sentiment. Heightened geopolitical risks have pushed investors toward safe-haven assets, with gold and government bonds experiencing increased demand. These concerns added to the cautious tone in markets already grappling with mixed corporate earnings and macroeconomic uncertainty.
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In China, equities edged lower, while Hong Kong’s Hang Seng index fell 0.25%. Despite some global funds entering segments of the Chinese market less exposed to tariffs, broader market sentiment remains subdued. Persistent concerns about domestic economic challenges and global headwinds have kept the market rangebound.
In contrast to the somber mood in equity markets, Bitcoin surged to a record high. The cryptocurrency’s rally is being fueled by optimism over President-elect Donald Trump’s proposed economic policies, which are expected to favor growth and innovation. Bitcoin’s rise reflects growing investor appetite for alternative assets amid geopolitical and economic uncertainties.
Adding to the turbulence in Asia, India’s markets faced a sharp sell-off following news of a U.S. indictment against Gautam Adani, chairman of the Adani Group. The billionaire is accused of involvement in a multibillion-dollar bribery and fraud scheme.
The allegations wiped out $28 billion in market value from Adani Group companies, dragging India’s benchmark equity indexes lower. The developments have raised concerns about governance and transparency within one of India’s largest conglomerates, further rattling investor confidence.
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As markets digest Nvidia’s earnings and the broader implications for the AI sector, investors will also focus on geopolitical developments and corporate earnings reports. The combination of slower revenue growth in tech giants, escalating global tensions, and region-specific challenges underscores the complexity of navigating today’s investment landscape.
With safe-haven assets gaining traction and alternative investments like Bitcoin soaring, market participants are adopting a cautious approach as they seek to balance risk and opportunity in an uncertain environment.