Asian markets experienced narrow trading ranges, reflecting a cautious stance by investors who were preparing for a series of earnings reports that could significantly influence risk assets.

In particular, equity benchmarks in Australia and South Korea saw slight declines on Wednesday, while Japanese stocks struggled against the backdrop of the yen’s recent appreciation. Additionally, two-year Treasury yields, often considered more sensitive to interest-rate policy changes, dropped by four basis points in early Asian trading.

A significant focus for investors is Nvidia Corp., as the chipmaker’s upcoming earnings report is anticipated to be a crucial indicator of whether the current enthusiasm surrounding artificial intelligence (AI) stocks can sustain its momentum. This follows a less-than-stellar performance earlier in the week by Chinese e-commerce giant PDD Holdings Inc., which has contributed to a subdued sentiment towards the tech sector. Meanwhile, other notable Chinese companies such as Cnooc Ltd., BYD Co., and Meituan are also slated to disclose their earnings on Wednesday.

Market strategist Jun Rong Yeap from IG Asia Pte. highlighted that Nvidia’s results could be a pivotal moment for global markets. “Given the extreme optimism priced around AI stocks over the past year, Nvidia’s performance will be scrutinized closely. Its share price, which remains near recent highs, indicates high expectations. Any negative surprise could trigger significant market reactions.”

Traders are bracing for substantial volatility in Nvidia’s shares, with options market activity suggesting a potential 10% movement in either direction post-earnings. The stock has already surged approximately 160% this year and an astonishing 1,000% since its bear-market low in October 2022. Analysts generally forecast that Nvidia will report over 70% revenue growth for the current quarter, with some predicting even more substantial increases. These results will be closely watched as an indicator of AI spending trends across the tech industry.

Elsewhere in financial markets, Bitcoin dipped below the $60,000 mark early Wednesday amid a broader cryptocurrency market retreat that also saw Ether experience a sharp decline. Conversely, oil prices rose after a previous session’s slide, which had interrupted a three-day rally.

Economic data presented mixed signals. US consumer confidence reached a six-month peak in August, driven by more positive perceptions of the economy and inflation, even as optimism about the labor market waned. Meanwhile, Australian bond yields fell ahead of the country’s monthly inflation report.

With ongoing uncertainties surrounding Federal Reserve policy, the economic landscape, and the forthcoming US presidential election, one thing remains evident on Wall Street: investment in AI continues to be a critical factor.

Chris Senyek from Wolfe Research commented on market conditions ahead of a significant US payrolls report due on September 6th. “We maintain a bullish outlook but acknowledge that short-term risks are skewed to the downside,” he noted. “Seasonally, we’re entering a weaker period, which is further intensified during election years.”

This article was generated with Bloomberg Automation’s assistance.