Global Markets on Edge as Nvidia Earnings Loom

Global stocks linger near record highs as markets anticipate Nvidia's earnings results. Europe's benchmark STOXX index rose, driven by technology stocks, while the U.S. dollar weakens amid rate cut anticipations. Nvidia's financials will significantly impact market sentiment, particularly with AI-focused tech stocks.

Global stocks remained close to all-time highs on Wednesday as investors eagerly awaited Nvidia's earnings results. Sterling reached a two-and-a-half-year high amid speculation that Britain might trail the U.S. in cutting interest rates. MSCI's global stock gauge inched up 0.03% to 831.07, nearing the record close of 831.34 set on Aug. 23, as market instability from earlier in the month eased with signs of inflation control.

Europe's STOXX index rose 0.4% to a one-month high, lifted by technology stocks in anticipation of strong Nvidia earnings. Nvidia's market value has surged, given its dominance in AI-related computing hardware. The stock has appreciated around 3000% since 2019, and with a market cap of $3.2 trillion, any movement in its share price affects broader markets.

Expected second-quarter revenue might double but could still disappoint. Options pricing indicates traders forecast a potential 10% swing in market value, marking a historical earnings movement. According to Capital.com analyst Kyle Rodda, Nvidia's earnings will set the tone for the sector and potentially usher Wall Street to new highs.

Rodda emphasized that Nvidia's revenue and sales guidance acts as a measure of AI capital expenditure, influencing projections for other major tech firms. In response, S&P 500 and Nasdaq 100 futures dipped slightly. Any shortfall in Nvidia's results could negatively impact megacaps and semiconductor stocks, which have rallied on AI-driven economic optimism.

While Nvidia's impact is closely watched, Australian gambling firm Tabcorp's shares fell 17% to a four-year low due to unmet earnings targets, marking its steepest decline since 2008.

In currency markets, the Australian dollar briefly touched a high of $0.6813 after stronger-than-expected inflation data. The U.S. dollar's weakening, with expectations of Federal Reserve rate cuts, has buoyed other currencies. It hovered at 100.98, above a 13-month low reached earlier. Rates futures suggest 100 basis points of U.S. cuts this year as Fed Chair Jerome Powell signaled the onset of rate reductions.

Sterling performed robustly, hitting a two-year peak before easing. Rabobank's senior strategist Jane Foley predicts modest rate cuts by the Bank of England compared to the Fed's more aggressive schedule.

U.S. Treasury yields remained stable. Bitcoin fell 3% amid heavy selling, while gold prices slipped 0.9% due to the dollar's minor recovery. Oil prices declined nearly 2%, driven by concerns over Chinese demand and broader economic risks.

(With inputs from agencies.)