Asia shares slipped on Tuesday while oil prices extended losses, after threats from the US for an “economic D-Day” of sanctions on Iran turned out to be a damp squib.
US Treasury yields were off their recent highs following a report that the Treasury Department might tap into its cash account to finance increased debt buybacks, which could reduce the need for additional sales of short-term bills.
The tech sector is holding its breath for Nvidia’s results on Wednesday; investors are aware how hard it will be for the chipmaker to meet lofty expectations.
Analysts are generally looking for quarterly revenue to almost double to around $US92 billion ($A128 billion), with full-year earnings guidance seen in a range of $US103 billion ($A144 billion) to $US105 billion ($A147 billion).
“Those are really high expectations to be met,” said Fabien Yip, a market analyst at IG.
“Judging from Nvidia’s track record, it won’t be surprising if they meet the headline numbers, but I think the more piece is people are trying to understand whether there are concerns on the circular deals powering its growth and whether that growth percentage is sustainable in the upcoming quarters.”
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5 per cent, while Japan’s Nikkei lost 0.9 per cent and South Korea’s Kospi slid 2.7 per cent.
Also weighing on tech sentiment was Alibaba’s launch of a $US10.2 billion ($A14.2 billion) share sale at a steep discount to fund its AI ambitions as well as disappointment over Samsung Electronics’ shareholder-return plan.
Nasdaq futures were off 0.08 per cent while S&P 500 futures were flat. EUROSTOXX 50 futures edged 0.05 per cent lower.
On Monday, the Trump administration warned countries to cut their business ties with Iran or face secondary sanctions as part of what it billed as an “economic D-Day,” though the Treasury Department stopped short of imposing any penalties.
Oil prices fell in the wake of the announcement and were little changed on Tuesday, with Brent crude futures down 0.1 per cent to $US92.08 ($A128.54) a barrel. US crude edged 0.1 per cent higher to $US85.09 ($A118.78) per barrel; both measures fell more than 2.0 per cent overnight.
“We do not expect China – Iran’s largest trade partner – to bow to US pressure to cease commerce with Iran,” said Joseph Capurso, a strategist at the Commonwealth Bank of Australia.
“The US’ campaign against Iran puts at risk the trade truce between the US and China ahead of the leaders meeting next month.”
Still, the threat of being cut off from the dollar-based financial system stoked rumours that some countries and banks might need to buy dollars in anticipation, lending support to the greenback.
The US dollar extended gains against its Canadian counterpart and last stood at C$US1.3844 ($A1.9326) after a rise of more than 0.5 per cent overnight.
On Monday, US President Donald Trump threatened to raise US tariffs on all cars, trucks and automotive parts from Canada to 50 per cent starting on January 1, escalating a trade fight after negotiations collapsed last week.
The euro strayed from a three-month high and last bought $US1.1668 ($A1.6288), while sterling added 0.06 per cent to $US1.3638 ($A1.9038).
Market participants will be focused on Federal Reserve Chair Kevin Warsh’s speech in Jackson Hole, Wyoming, on Friday, where investors are hoping for some clarity on the outlook for US interest rates.
“Fiscal uncertainty is unlikely to fade soon … there is scope, though, for the Warsh-led Fed to ease some monetary policy uncertainty by clarifying its reaction function – specifically, how long it is willing to keep rates on hold to see inflation return to its 2.0 per cent target,” Standard Chartered analysts said.
“All eyes will be on Chair Warsh’s Jackson Hole speech for a signal, if not forward guidance.”
Spot gold was up 0.5 per cent at $US4,675.51 ($A6,526.81) an ounce.
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