Asia Open: NVIDIA results to digest, US data to lead sentiments ahead

Sense of calm following NVIDIA’s results

NVIDIA’s earnings came with much less volatility than expected, as its stock traded just under 1% lower after some initial post-market whipsaw. Option pricing was looking for a 7.7% implied move in the lead-up to the result release, but the absence of major surprises may have kept sentiment relatively calm.

As usual, the company beat both top and bottom-line estimates, while delivering an upbeat guidance for the current quarter. Sellers may find fault with its slight gross margin decline but one to note that this stems from newer data centre products—ultimately beneficial for long-term growth.

• Revenue: $39.33 billion vs. $38.05 billion estimated

• Earnings per share (EPS): $0.89 adjusted vs. $0.84 estimated

• 1Q Revenue Outlook: $43 billion ± 2% vs $41.78 billion estimated

• Management guidance: Expects a “significant ramp” of sales of Blackwell in 1Q

• Gross margin: 73%, down 3 basis points on an annual basis

With the underperformance of the Magnificent Seven stocks since the start of the year, NVIDIA’s post-earnings stability may be much welcomed. That said, the ongoing struggle for the Nasdaq to bounce at trendline support suggests that a cautious tone may still be warranted. The trend of rotation towards areas of value in the markets may still have room to run, as Eurozone and Chinese stocks made another move higher yesterday in a display of resilience. If the Nasdaq fails to reclaim the 21,416 level, where the lower channel trendline stands, it could signal further downside towards the 20,640 level next.

Look-ahead

Looking ahead, focus shifts to the economic calendar, with US preliminary gross domestic product (GDP), initial jobless claims, and durable goods data in the spotlight. The recent pullback in both Treasury yields and equities suggests growing concerns over slowing growth amid a weaker run of US data. As such, further downside surprises in upcoming growth indicators may see market participants unwind their longs further and extend the recent retracement in US indices.

Asia Open

We head off to a more positive session in Asia, with Nikkei up 0.48%, ASX gaining 0.37%, while KOSPI lags, down 0.57% at the time of writing. Sentiments are expected to deliver a first-hand reaction to NVIDIA’s results, with the sense of calm to be balanced with fresh tariff threats from US President Donald Trump – this time targeting the European Union with a proposed 25% levy. The key uncertainty remains on how much of these tariff threats will eventually materialise, though broad resilience in market sentiments suggests that market participants are still expecting somewhat of a negotiated outcome with minimal tariff implementation.

In forex (FX), the USD/JPY continues to show signs of weakness, struggling to rebound from a near-term lower channel trendline. The daily relative strength index (RSI) remains below its midline, having failed to break above it twice recently. Attention now turns to Japan’s Deputy Governor Uchida’s speech on 5 March, with markets pricing in a potential rate hike in the latter half of the year. These expectations could be underpriced if upcoming Shunto negotiations drive stronger wage growth and US tariff risks proved to be less than feared.

In the commodities space, oil prices have struggled to recover as well, with the recent run of softer US economic data and the uncertainty surrounding tariff risks renewing concerns around oil demand outlook and keeping sentiments in check. The rising prospects of a peace deal between Ukraine and Russia are likely to remain a key overhang as well, with any deal potentially seeing an influx of Russian oil supplies into the market. That is the uncertainty that market participants will have to grapple with for longer.

For now, prices are back to a potential resistance-turned-support trendline, but the RSI continues to reveal downside momentum. Having broken below the near-term trendline support at the US$74.50 level, a continued drift lower amid feeble bounces seems to be the likely case here, with stronger support to potentially kick in at the key psychological US$70.00 level.