Asian markets struggled on Wednesday as investor nerves over AI-driven tech valuations weighed on sentiment ahead of Nvidia’s earnings report. The Nasdaq fell 1.2% overnight, extending losses for a second day and retreating more than 6% from its late-October record. S&P 500 and Nasdaq 100 futures also slipped further, while European futures were mixed. In Asia, Japan’s Nikkei, which has posted the steepest declines among major markets this month with a roughly 7% loss in U.S. dollar terms, gave up early gains to trade flat. Mainland China indexes remained steady, and Hong Kong shares fell 0.5%.
Nvidia, whose graphics processing units (GPUs) underpin the artificial intelligence boom, has been at the heart of a global market rally, lifting both tech and AI-linked stocks. The company reports after U.S. market close and is expected to post a 56% jump in revenue for its fiscal August–October quarter, reaching $54.92 billion, according to LSEG data. Analysts caution that the stock is “priced for perfection,” meaning GPU demand must remain strong for years to justify current valuations.
Investor Concerns
Investor anxiety is compounded by doubts over whether the U.S. Federal Reserve will cut interest rates in December, coupled with concerns that President Donald Trump’s declining approval rating could spur fiscal spending and stoke inflation. These factors have kept safe-haven U.S. Treasuries from gains, with the benchmark 10-year yield holding at 4.12%. Market pricing currently reflects only a 42% chance of a 25-basis point rate cut, down sharply from near-certainty a month ago. Nomura chief economist Rob Subbaraman noted that any economic slowdown could face far less fiscal support than during the pandemic or global financial crisis, given governments’ strained finances.
In Japan, worries over ballooning government spending have pushed long-end bonds lower, with yields reaching a 17-year high. A 20-year auction drew solid bids, though the 10-year yield drifted higher to 1.781%.
Cryptocurrencies and Currencies
Bitcoin recovered slightly from a seven-month low, trading at $91,400 after dipping below $90,000 on Tuesday. This is still about 27% below its October record. Justin d’Anethan, head of research at Arctic Digital, said that while most investors are currently underwater, this is not the start of a bear market but a reaction to falling equities, disappointing rate-cut expectations, and deleveraging.
In foreign exchange markets, the dollar remained strong. The Japanese yen weakened to 155.45 per dollar, approaching levels where intervention warnings have been issued. The euro held at $1.1580, while the Australian and New Zealand dollars fell about 0.5% in Asia trade.
Commodities
Gold, which reached record highs alongside stocks in October, eased to $4,070. Brent crude futures slipped 21 cents to $64.68 a barrel. Soybeans climbed to a 17-month high following significant purchases by China from U.S. suppliers, signaling continued strength in agricultural demand.
What’s Next
All eyes are on Nvidia’s earnings report. Investors are watching whether the company can deliver on revenue and guidance expectations, as its performance could influence tech stocks worldwide and determine the next direction for AI-driven market sentiment. The combination of geopolitical uncertainty, central bank policies, and key earnings results has left markets cautious, with volatility likely to persist in the coming days.
With information from Reuters.
