Nasdaq Futures Slip Before Tech Earnings, Brent Up: Markets Wrap

(Bloomberg) — US equity-index futures slipped and Asian stocks pared gains as investors turned cautious ahead of Alphabet Inc.’s earnings after recent volatility pushed a key semiconductor gauge into a bear market. Oil climbed as hopes for US-Iran peace talks faded.

Nasdaq 100 futures fell 0.5% and S&P 500 contracts eased 0.1% as investors pared positions ahead of Alphabet’s guidance on artificial intelligence spending. MSCI’s Asia Pacific equities gauge rose 0.3% after surrendering gains of as much as 1.7%. Technology stocks in South Korea, Japan and Taiwan all lost momentum as the Asian day progressed. European shares were set for a tepid open.

The moves in Asia followed a more than 5% jump in a US semiconductor gauge on Tuesday and gains for the Wall Street benchmarks. Alphabet and Tesla Inc. are both due to report earnings after the bell on Wednesday.

“Alphabet’s earnings will be important in gauging market sentiment,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “Expectations for the results of hyperscalers, are high and investors need to be mindful of the risk that the shares could fall even if earnings beat market forecasts.”

Brent climbed 1% to $92 a barrel after US President Donald Trump minimized the prospect of immediate talks with Iran. Gold gained as much as 1.6% to about $4,142 an ounce — the highest level in two weeks — as dip buyers supported prices despite escalating Middle East tensions. The rise in crude oil this week has reignited inflation concerns and pushed Treasury yields to their highest level in two months on Tuesday.

Recent volatility in the year’s best-performing corner of the market has underscored investors’ doubts over whether massive AI spending will translate into commensurate returns. The lofty expectations for Alphabet and Tesla’s earnings may leave little room for disappointment.

“The burden of proof has changed. Investors are no longer asking whether companies can withstand the uncertainty,” said Bret Kenwell, an analyst at eToro. “They want growth and guidance strong enough to justify elevated valuations.”

Concerns about expensive valuations drove a selloff in chip stocks earlier this month, pushing the Philadelphia Semiconductor Index briefly into a bear market last week. The gauge has gained two days in a row since then, while a chip benchmark in Asia jumped more than 2.4% on Wednesday.

What Bloomberg Strategists Say…

“Bullion is extending gains despite a surge in crude as the US-Iran conflict drags on, flipping the script that played out back in March when higher oil prices sent the dollar and real yields higher, proving toxic for the metal. Central banks keep adding gold to reserves and investors may be returning to the precious metal as a diversification play.”

— Garfield Reynolds, MLIV Asia Team Leader. For full analysis, click here.

Other precious metals also gained. Silver climbed 1.5% to about $59.60 an ounce, while platinum also advanced.

The yen was little changed in Asian trade after sliding past 163 per dollar on Tuesday for the first time since 1986, testing Japanese authorities’ resolve to intervene. Two senior Japanese officials warned that authorities are ready to take action in the currency market if necessary.

Treasuries held Tuesday’s losses, which pushed 10- and 30-year yields to the highest levels in about two months. The surge in oil prices has rekindled concerns that inflationary pressures will prompt the Federal Reserve to raise interest rates.

The market is learning to live with higher oil prices, but “the big question is, for how long?” Tim Waterer, chief market analyst at KCM Trade in Sydney, wrote in a note. “Right now, solid earnings are coming to the rescue and are helping divert market focus away from the fact that oil prices are advancing.”

Attention is also on pharmaceutical companies after Trump announced plans to impose 100% tariffs on generic drugs imported to the US, beginning in August 2028. Indian pharma stocks slipped.

That said, investors remain focused on company results. US earnings growth should continue to support stocks in the second half of the year, even as near-term bullish positioning and macro headwinds weigh on share prices, according to Goldman Sachs Group Inc. strategists.

Nearly 20% of companies in the S&P 500 by market value are slated to report results this week. Alphabet and Intel will give investors a clearer read on how AI spending is reshaping the tech industry. Intel reports Thursday.

While the recent selloff in AI-related shares has raised questions about the durability of the trade, some strategists see it as a reset rather than a sign of deteriorating fundamentals.

“The long-term AI backdrop appears to be intact,” said Adam Turnquist at LPL Financial. “The recent correction appears more consistent with a healthy reset following a parabolic advance than a fundamental breakdown in the AI investment theme.”

Corporate News:

Super Micro Computer Inc. shares rose about 15% in extended trading after the server maker issued preliminary results saying its backlog hit a record on new orders in the quarter of more than $60 billion. SpaceX has set the stage for one of the largest share unlocks in capital markets history, with as much as $116 billion worth of stock becoming eligible for sale for the first time next month. Cathay Pacific Airways Ltd. expects a jump in first-half net income, driven by strong passenger and cargo demand. Banco Santander SA posted second-quarter net income that beat analyst estimates as it continued to add millions of customers. Equinor ASA said second-quarter earnings exceeded expectations as higher natural gas prices in Europe and a boost to its oil trading business from the Iran war drove up profit. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 6:55 a.m. London time Nasdaq 100 futures fell 0.5% The MSCI Asia Pacific Index rose 0.3% The MSCI Emerging Markets Index rose 0.1% Japan’s Topix rose 0.6% Australia’s S&P/ASX 200 rose 0.2% Hong Kong’s Hang Seng fell 1.1% The Shanghai Composite was little changed Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1408 The Japanese yen was little changed at 163.14 per dollar The offshore yuan was little changed at 6.7750 per dollar The British pound was little changed at $1.3383 Cryptocurrencies

Bitcoin fell 0.7% to $65,928.91 Ether fell 0.2% to $1,919.04 Bonds

The yield on 10-year Treasuries was little changed at 4.63% Japan’s 10-year yield advanced two basis points to 2.740% Australia’s 10-year yield advanced three basis points to 4.97% Commodities

Spot gold rose 1.3% to $4,130.11 an ounce West Texas Intermediate crude rose 0.8% to $85.05 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Momoka Yokoyama and Yihui Xie.

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