Asian shares post modest drop with focus on Nvidia

Asian equities struggled for direction at the open Wednesday as investors awaited Nvidia Corp.’s earnings for guidance on where the markets head next after a strong rally since April.

Shares edged up in Australia while gauges in Japan and South Korea were flat. Chips and the electronics sector were in focus with Nikon Corp. shares jumping 20% in Japan while Chinese artificial intelligence linchpin Cambricon Technologies Corp. swung to a record profit. US shares gained Tuesday, led by Nvidia before the tech giant’s hotly-anticipated earnings that are scheduled to report after the bell on Wednesday.

A gauge of the dollar and longer-dated Treasuries steadied in Asia after they declined Tuesday following President Donald Trump’s push to oust Federal Reserve Governor Lisa Cook. The gap between five and 30-year yields is at its steepest since 2021.

While political meddling in monetary policy after Trump’s move drew much of the market’s focus, traders face key risks this week with Nvidia’s earnings and Friday’s inflation report. Even with tariff and geopolitical headlines flaring, investors remain anchored to a bullish market script: a likely September rate cut, resilient economic growth, and corporate earnings strong enough to keep equity sentiment afloat.

“Equity markets will be looking squarely at Nvidia’s upcoming earnings report for cues as to whether the current bull run continues or stalls out,” wrote Tim Waterer, chief market analyst at KCM Trade.

Nvidia’s earnings report is expected to give an update on the artificial intelligence spending boom — and how the US-China rivalry is limiting growth. Analysts estimate that the biggest buyers of AI hardware are still investing heavily in new gear, with the company’s sales set to grow at a pace of more than 50% this year.

Dimming the excitement is confusion over how much business Nvidia will be able to do in China.

“Nvidia’s results transcend the company, becoming a barometer of macroeconomic activity, a talisman for the artificial intelligence trade, and a critical pressure point for global geopolitics,” wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne.

Meanwhile, Trump said he was prepared for a legal fight while the Fed, weighing in for the first time this week, said it would abide by any court decision in Cook’s legal challenge of her dismissal.

The Fed’s perceived independence from government whims is a bedrock assumption of US markets, and any change to that perception could weigh on US credit ratings.

“Trump’s push to fire Cook has exacerbated concerns about the Fed’s independence,” said Ian Lyngen at BMO Capital Markets. “While the price action in US rates has been largely contained to the recent range, many of the go-to hedges against an erosion of Fed independence outperformed on the news of Cook’s firing.”

Separately, economic data Tuesday showed US orders for business equipment increased in July by more than projected, suggesting companies are moving forward on investment plans as uncertainty around trade and tax policy gradually diminishes.

Also, consumer confidence fell slightly in August as Americans worried more about their prospects of finding a job.On the trade front, the US will slap a crushing 50% tariff on some Indian goods starting Wednesday — the highest in Asia — as Trump presses ahead with the levies to punish New Delhi for buying Russian oil.