(Nov 13) : Stocks in Asia looked set for a cautious open as investors weighed the fallout from Nvidia Corp.’s leadership upheaval on the broader artificial-intelligence trade, a rally in oil and a surge in Treasury yields.
Asian equity-index futures were mixed, with contracts for Australia and Hong Kong pointing lower while those for South Korea and Japan advanced. Nvidia, the company at the heart of the AI boom, fell 4.3% after Chief Executive Officer Jensen Huang was ousted. The Nasdaq 100 fell 0.3% and the S&P 500 lost 0.4%. Elsewhere, SpaceX and Tesla Inc. were said to be making progress in merger talks.
Oil rose, with Brent crude climbing over 3% to around US$95.70 a barrel, adding to inflation concerns. Treasury yields advanced across the curve as traders braced for faster Fed rate hikes, while the dollar gained. Gold fell for a third session on Thursday and Bitcoin slipped to around US$71,500.
The upheaval at Nvidia is testing the AI trade without derailing the broader investment boom. Instead, it may make investors more selective, favoring companies best placed to benefit from continued spending.
“This is going to be a more differentiated story and players that have stronger balance sheets that are more focused on doing the hard work of that community engagement are likely to be the winners in this next stage of the buildout,” Mike Pyle, deputy head of BlackRock’s Portfolio Management Group, said in an interview on Bloomberg Television.
That shift was already evident on Wall Street. Shares of Broadcom Inc. and Advanced Micro Devices Inc., which compete with Nvidia in parts of the AI chip market, rallied over 5% as investors sought potential beneficiaries from the industry leader’s setback.
Nvidia’s market capitalization briefly dropped below US$4 trillion with revelations about Huang’s extramarital affairs, including one with a suspected Chinese spy, rattling investors ahead of earnings. A related probe into suspected spy Alice Huang and efforts to smuggle Super Micro Computer Inc. products to China sent that company’s shares down as much as 16%, the most in more than five months.
“Nvidia’s earnings already demand close attention, but they will be under an even brighter spotlight next week,” said Bret Kenwell at eToro. “Investors will be looking to Nvidia for a fresh read on demand and a reason to regain confidence.”
Two other events next week may provide a broader test of appetite for the AI trade: Anthropic PBC’s highly anticipated IPO and CoreWeave Inc.’s plan to raise at least US$4 billion through an investment-grade loan offering. Strong institutional demand for Anthropic suggests appetite for AI exposure remains robust.
In Asia, traders will also be watching the yen after it weakened past 160 per dollar for the first time since September, reviving the prospect that Japanese authorities may intervene to support the currency.
“Markets are jittery about potential FX intervention whenever we approach the 160 area,” said Win Thin, chief economist at Bank of Nassau 1982.
Oil added another source of pressure after President Donald Trump said the US could forgo a deal with Iran, dimming hopes for a breakthrough to end the war that has disrupted Middle East supplies.
Higher oil prices added to pressure on Treasuries, extending a selloff sparked Tuesday by hotter-than-expected inflation and signals that Fed officials may favor more aggressive rate hikes. Policy-sensitive two-year yields climbed 14 basis points, while 10-year yields rose 13 basis points.
“Investors continue to pencil in more rate hikes,” said Gennadiy Goldberg, head of US interest rates strategy at TD Securities. While setbacks for US technology shares — which benefited Treasuries last month — “could short-circuit the bearish move at some point, the macro underpinnings are the ones driving Treasuries right now.”
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