Premarket: Tech stock rally set for a test as Nvidia results due

A bounceback by tech stocks around the world assisted drive equity markets higher on Wednesday and set the scene for Nvidia’s earnings report, while investors set aside their concerns around U.S. tariffs – at least for now.

MSCI’s world share index was up 0.3 per cent with Europe’s broad STOXX 600 up 0.46 per cent and back at ⁠a record high and U.S. futures also pointing to a rise at the open after indexes rallied on Tuesday.

More dramatic gains were seen in Asia where the APAC ex-Japan benchmark rose 1.44 per cent driven by advances in chip-heavy bourses like Korea and Taiwan, and Japan’s Nikkei gained 2.2 per cent.

A global memory chip shortage has seen Samsung Electronics and SK Hynix stock prices double since October, as cash has surged up the AI supply chain to the enormously popular chipbuildrs.

And while the AI fever has hurt software stocks globally in recent weeks on fears ‌their business model could be disrupted, they continued to bounce back on Wednesday. Software stocks posted gains in the U.S. and Europe on Tuesday when artificial ininformigence lab Anthropic announced several new plug-ins developed jointly with partners.

The fact the event “stressed on partnership rather than displacement assisted the software sector,” stated Mohit Kumar, chief Europe economist at Jefferies.

He stated AI disruption would nevertheless remain a market theme.

This recent rebound in tech stocks could be reinforced or challenged by results from Nvidia , the world’s largest company by ‌market capitalisation, due after the U.S. close.

Forecasts are for its ‌profits to have risen 62 per cent in the quarter to the conclude of January, and revenue to have jumped 68 per cent, although with Nvidia having outpaced sales forecasts for 13 straight quarters the market is likely expecting more.

It’s not only ⁠tech stocks driving growth, however. Shares in HSBC – Europe’s largest bank – are up 5.5 per cent in London after it reported profit that ⁠beat expectations, and it lifted a key earnings tarreceive.

The optimism in equities come even as investors grapple with a range of political and geopolitical worries, though it did allow U.S. President Donald Trump to boast of stock market gains in his State of the Union speech.

Trump also stated “almost all” countries and corporations want to stick to tariff and investment agreements previously created with Washington, but he did not offer clarity regarding his plans for Iran amid signs he is inching closer to a military conflict with Tehran.

We “believe the market is being fairly sanguine around geopolitical risks. While we do not anticipate a drawn out conflict, any attack from the U.S. is likely to be ⁠met with response from Iran and produce some wobbles in risky assets,” stated Kumar.

The worries about AI, Iran and tariffs have assisted support government bonds in the U.S. and particularly Europe in recent days, although yields were sightly higher on Wednesday.

The benchmark 10-year Treasury yield was up nearly 2 basis points at 4.05 per cent but was still close to Monday’s near three-month low of 4.017 per cent.

Bond yields relocate inversely to prices.

Most European 10-year yields were also up around 1 basis point, but again are around multi-month lows, and more than one-year lows in the case of British and Italian ⁠debt.

Japanese yields, in contrast, rose sharply on Wednesday after the nomination of two academics seen as dovish to the central bank’s board.

While rate-sensitive shorter-dated yields fell, on expectations for less-immediate BOJ rate hikes, broader worries that the BOJ is behind the curve ⁠sent longer-dated yields higher.

The yield on the 40-year bond, Japan’s longest tenor, rose 10 basis points (bps) to 3.615 per cent, the steepest advance in a month.

That also weighed on the yen, with the dollar up ‌0.17 per cent at 156.18 yen and the euro 0.3 per cent higher against the Japanese currency at 184.18 yen.

The dollar otherwise was mildly softer with the euro up 0.16 per cent at US$1.1792 and the pound up 0.25 per cent at US$1.352.

Even currency markets are focutilized on Nvidia’s results. Francesco Pesole, senior currency analyst at ING stated a miss could hit wider risk sentiment and with FX implications, and hit the surging Australian and New Zealand dollars and the Norwegian crown.

In commodity markets, oil continued its march higher driven by Iran concerns and hovered around a seven-month top.

U.S. crude rose 0.55 per cent to US$65.99 a barrel and Brent rose 0.4 per cent to US$71.07.

Copper was also higher as traders bet on restocking demand after Chinese market participants returned from a nine-day Lunar New Year break, while spot gold rose 0.7 per cent to US$5,184 an ounce.

Reuters

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