Asian equities are likely to trade within a narrow range following a volatile session on Wall Street, but with a slight upward bias as investors position themselves ahead of Nvidia’s earnings report and the release of FOMC minutes later today. US Treasuries remained range-bound in thin trading as participants awaited these key macroeconomic data releases, along with the upcoming US PCE next week.
Looking forward, it is essential to monitor the tech and semiconductor sectors closely, as the Nasdaq led price action yesterday due to pre-positioning around Nvidia. In the options market, implied earnings moves for Nvidia are around 8.5%, significantly lower than the stock’s realized moves in recent earnings reports, which were 14%, 26%, and 16%. Market sentiment remains cautiously optimistic ahead of Nvidia’s earnings, with expectations for potential positive surprises tempered by concerns that the setup may mirror last year’s performance, where the stock traded sideways for eight months despite consistent earnings beats. Regardless of the outcome, Nvidia’s results could trigger some short-term and directional trades in both ways: up and down, as volatility is high on the implied stock expectations. All eyes will also be on the details of forward guidance; if positive, even if earnings fall slightly short of expectations, it could serve as a risk buffer as participants are more sensitive to future expectations in the AI/chip sector than past results.
