Shares rise ahead of Nvidia results; The BOJ keeps the exchange rate markets guessing

SINGAPORE (Reuters) – Global shares started the week on a firmer footing ahead of a much-anticipated earnings report from Nvidia, while comments from its central bank chief in Japan left markets all the more uncertain about the country’s interest rate outlook.

Bank of Japan Governor Kazuo Ueda reiterated on Monday that the central bank will continue to raise interest rates if economic and price developments move in line with its forecasts, but did not mention whether a hike could come in December.

However, he later said at a press conference that keeping inflation-adjusted real interest rates low for too long could cause excessive inflation and force the BOJ to raise rates quickly.

Ueda’s comments had been closely watched by investors for clues about the BOJ’s next rate hike, which could have acted as a catalyst to push back against the yen’s weakness.

The Japanese currency has fallen about 7% since October against a resurgent dollar and weakened last week above the 156 per cent level. dollar for the first time since July, keeping traders wary of any intervention by Japanese authorities.

It was last marginally lower at 154.40 per dollar.

On the chance of a BOJ hike next month, IG market analyst Tony Sycamore said it would “depend on where the dollar/yen is to some extent”.

“If the dollar/yen rises to around 160, I think that would increase (the chances) of a rate hike. But I think he’s probably not unhappy with the dollar/yen sitting around 150,152. I think that will probably hold him on the sidelines until next year.

“It’s coming, it’s just a matter of when…the Japanese economy performs.”

Despite a weaker yen, Japan’s Nikkei fell 1.16%, dragged down by a drop in tech stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.

Nasdaq futures rose 0.7%, while S&P 500 futures rose 0.27%, ahead of Nvidia’s third-quarter results on Wednesday, with analysts expecting the artificial intelligence chip leader to post a jump in revenue.

Shares of Nvidia are up nearly 200% this year, with its heavy weighting in the S&P 500 partly responsible for the index’s charge to record highs this year.

But its blistering multi-year run has also raised the bar for better earnings, and a decline could raise concerns that the market’s AI hopes have outstripped reality.

Elsewhere, EUROSTOXX 50 futures rose 0.12%, while FTSE futures added 0.14%.

China’s CSI300 blue-chip index pared early gains to last trade 0.3% lower. The Shanghai Composite Index fell 0.03 percent.

Hong Kong’s Hang Seng index rose 0.65 percent.

U.S. Treasury yields held near multi-month highs on Monday, boosted by bets on less aggressive rate cuts by the Federal Reserve. (US/)

The benchmark 10-year yield stabilized at 4.4296%, while the two-year yield last stood at 4.2971%.

Futures imply a 60% chance the Fed will ease by a quarter point in December and have just 77 basis points of cuts factored in at the end of 2025, compared with more than 100 a few weeks ago.

It comes on the back of Fed Chairman Jerome Powell’s comments last week that signaled borrowing costs could remain higher for longer, and on the view that US President Donald Trump’s touted policies of tariffs, reduced immigration and debt-financed tax cuts will induce. inflation, limiting the scope for further policy easing.

“With changes coming in immigration policy, tariff policy, and fiscal policy, Fed officials would nevertheless consider it more readily in light of the inflationary impact these policies pose and the need to keep real policy rates higher than otherwise, as a result, ” said Thierry Wizman, global currency and rates strategist at Macquarie.

At least seven Fed officials are due to speak this week, and traders assume they will sound cautious about aggressive cuts.

The shift in the outlook for US interest rates and inflation has in turn lifted the dollar, which has scaled new highs along with US Treasury yields.

Against a basket of currencies, the dollar hovered near a one-year high of 106.63.

Sterling last bought at $1.2636, languishing near last week’s six-month low, while the euro rose 0.02% to $1.0544.

A number of European central banks are also speaking out this week and could sound more dovish given recent soft economic data and the risk of Trump’s proposed tariffs hitting EU trade.

In commodities, oil prices were mixed. Brent crude futures rose 0.1% to $71.11 a barrel. barrel, while U.S. crude oil futures fell 0.04% to $66.99 a barrel. (OR)

Spot gold rose 0.85% to $2,583.27 per ounce, recovering from its sharp decline last week. (GOL/)

(Reporting by Rae Wee; Editing by Jamie Freed)