European Stocks Fall as Focus Turns to Nvidia: Market Shuffled

(Bloomberg) — European stocks fell on Tuesday, pulling back from recent record highs, as investors retreated to await this week’s results from Nvidia Corp.

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The Stoxx 600 index fell 0.4%, with drugmaker GSK Plc among the losers as it faces a whistleblower lawsuit that could cost it billions of dollars. Stock futures on the S&P 500 and Nasdaq 100 were virtually unchanged. In New York premarket trading, Palo Alto Networks Inc. fell as much as 8.5% after the security software company released a disappointing quarterly revenue forecast.

Investors continued to monitor commodity prices after the Bloomberg Commodity Spot Index reached its highest level since January 2023, while gold, silver and copper changed hands near record highs. However, the rise in raw materials has so far failed to derail the conviction that inflation will continue to slow, allowing the Federal Reserve and other major central banks to cut interest rates this year.

The main focus of markets now is Nvidia – the beacon of the current artificial intelligence frenzy – which has driven a large portion of the S&P 500’s recent profits. Nvidia shares, which have risen more than 90% this year, are up 2.5% in New York on Monday, sending the Nasdaq 100 index to another record high.

“The latest set of data on growth, inflation and Fed data provided the macro support for markets to continue rising. Nvidia’s 1Q24 earnings this week could drive the micro AI tailwind,” Jason Draho of UBS Financial Services Inc. said in a note.

Investors are on alert for potential headwinds facing markets following a strong rally that has lifted MSCI’s All-Country Stock Index up close to 10% this year. While the earnings season has been robust so far, a failure by large companies would be a risk as markets at all-time highs “may be becoming increasingly prone to profit-taking,” said Emre Akcakmak, a consultant of East Capital portfolios in Dubai.

Several central bank officials are also expected to speak on Tuesday, including Fed Governor Christopher Waller. His comments will be closely monitored after Cleveland Fed President Loretta Mester suggested on Monday that there was less room for interest rate cuts than previously expected.

With investors awaiting key catalysts such as the minutes of the Fed’s latest policy meeting and Nvidia’s results, trading volumes have fallen. The value of stock transactions on the New York Stock Exchange fell to the lowest level this year on Monday.

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In other markets, Bloomberg’s Dollar Spot Index traded flat, while bond yields were lower overall. Cryptocurrency prices rose on signs of momentum toward U.S. approval of exchange-traded funds that invest directly in the second-largest token, Ether.

Earlier, Chinese stocks fell and a broader gauge of Asian stocks fell after seven days of gains. The data showed little sign of a turnaround in China’s debt-plagued property sector, with local governments reaping the lowest revenue in eight years from land sales.

Main events this week:

• Fed’s Thomas Barkin, Christopher Waller, John Williams, Raphael Bostic, Susan Collins and Loretta Mester speak, Tuesday

• US Existing Home Sales Wednesday

• Fed Minutes, Wednesday

• Nvidia Earnings Wednesday

• Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, consumer confidence, Thursday

• G-7 financial meeting in Stresa, Italy, May 23-25

• US new home sales, initial unemployment claims, Thursday

• Fed’s Raphael Bostic Speaks Thursday

• US Durable Goods, University of Michigan Consumer Sentiment, Friday

• Fed’s Christopher Waller Speaks on Friday

Some of the main movements in the markets:

Actions

• The Stoxx Europe 600 was down 0.4% at 10:14 am London time

• S&P 500 futures remained unchanged

• Nasdaq 100 futures fell 0.1%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia-Pacific index fell 0.7%

• The MSCI Emerging Markets index fell 0.7%

Coins

• The Bloomberg Dollar Spot index was little changed

• The euro rose 0.1% to $1.0871

• The Japanese yen was little changed at 156.15 per dollar

• The offshore yuan was little changed at 7.2432 per dollar

• The British pound was little changed at $1.2717

Cryptocurrencies

• Bitcoin rose 2.1% to $70,974.87

• Ether rose 4.7% to $3,665.7

Titles

• The 10-year Treasury yield fell two basis points to 4.43%

• Germany’s 10-year yield fell two basis points to 2.51%

• Britain’s 10-year yield fell three basis points to 4.14%

goods

• Brent crude fell 0.9% to $82.93 a barrel

• Spot gold fell 0.3% to $2,417.81 an ounce

This story was produced with help from Bloomberg Automation.

–With assistance from Tania Chen, Joanna Ossinger, Selcuk Gokoluk and Michael Msika.

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