Morning Bid: Nvidia, Nikkei knocked - China dodges deflation
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[March 11, 2024] A
look at the day ahead in U.S. and global markets from Mike Dolan
Wall Street's most bizarre reaction to the relatively benign U.S.
employment report on Friday was a late selloff in stellar Nvidia - the
artificial intelligence poster child that's almost doubled in price
again this year.
Although many dismissed Nvidia's late 5% recoil as merely overdue profit
taking on its latest near-90% surge so far this year, the stock fell
another 1.5% overnight before recovering that ahead of Monday's bell.
And the move stopped Nvidia overtaking Apple as the second most valuable
company.
And there's an inevitable search for some smoking gun. Chipmakers
Broadcom and Marvell Technology also fell on Friday after their
quarterly reports failed to impress investors.
Hardly a game changer in itself, but Nvidia has been sued by three
authors who said it used their copyrighted books without permission to
train its NeMo AI platform.
And in another tech sideswipe on Monday, the European Union's privacy
watchdog said the European Commission's use of Microsoft software
breached EU privacy rules and the bloc's executive also failed to
implement adequate safeguards for personal data transferred to non-EU
countries.
Either way, the pullback does come after a wobbly week for the leading
"Magnificent Seven" of megacaps - perhaps indicating some feeling that
they'd all come a little too far too fast. After hitting record highs
earlier in the session, the S&P500 ended down 0.6% on Friday and futures
were in the red again early Monday.
The hiccup was hardly a reflection of the February employment report -
which was another statement on the rude health of the U.S. economy. New
payrolls beat forecasts last month, but the overall labor market cooled
with a rise in the jobless rate and ebbing of wage growth.
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That nailed in June for a first interest rate cut from the Federal
Reserve and saw full-year easing expectations climb to 95 basis points
and two-year Treasury yields drop to the lowest in a month.
And that all sets up Tuesday's consumer price report for February as the
next key moment in the Fed's assessment of the disinflation path.
Headline annual CPI inflation is expected to remain steady at 3.1% -
with the "core" rate ebbing to 3.7% from 3.9% the prior month.
By contrast overseas, China's jarring bout of deflation appears to have
eased somewhat as weekend data showed annual CPI inflation there for the
first time in six months - exceeding forecasts with a 0.7% advance. And
yet downward price pressures persisted with a deeper 2.7% annual slump
in producer prices.
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![](../images/031124PIX/busine45.jpg)
The logo of NVIDIA as seen at its corporate headquarters in Santa
Clara, California, in May of 2022. Courtesy NVIDIA/Handout via
REUTERS/File Photo
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How much the Lunar New Year holiday affected the readouts remains to
be seen, but China's stock benchmarks advanced 1.2% on Monday
nonetheless amid some relief.
China has also asked banks to enhance financing support for
state-backed China Vanke and called on creditors to consider private
debt maturity extension, in a rare intervention from central
government to help an embattled property firm.
In Japan, speculation about a Bank of Japan policy tightening as
soon as this month has intensified over the past week and
fourth-quarter GDP revisions on Monday saw initial indications of
late 2023 recession magiced away.
Although below the latest forecasts, Japan's revised gross domestic
product expanded at an annualised clip of 0.4% in the
October-December period, better than the initial estimate for a 0.4%
contraction.
But with the yen pushing one-month highs again on Monday amid the
BOJ concerns, Japan's Nikkei skidded 2% lower - with chip-equipment
maker Tokyo Electron losing 3% and chip-testing equipment maker
Advantest off almost 5%.
Elsewhere, the dollar was a touch lower.
But bitcoin hit another record high above $71,000, as the surge in
the token showed no signs of slowing down. Britain's financial
watchdog on Monday became the latest regulator to pave the way for
digital asset trading products after saying on Monday it will now
permit recognised investment exchanges to launch crypto-backed
exchange-traded notes.
Key diary items that may provide direction to U.S. markets later on
Monday:
* New York Fed inflation expectations survey, US Feb employment
trends
* Eurogroup finance ministers meet in Brussels
* U.S. Treasury auctions $56 billion of 3-year notes, and sells 3-
and 6-month bills
* U.S. corp earnings: Oracle
(By Mike Dolan, editing by Nick Macfie mike.dolan@thomsonreuters.com)
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