Asian equities experienced a decline on Wednesday, driven by underwhelming corporate earnings in China, which reignited worries about the country’s weakening economy. Investors are also on edge, eagerly anticipating Nvidia Corp.’s results to gauge the growth trajectory of stocks linked to artificial intelligence.

Chinese stocks listed in Hong Kong dropped by up to 1.5%, while mainland shares hit their lowest levels since early February. Notably, Nongfu Spring Co., a prominent bottled water manufacturer, saw its shares plummet by as much as 13% after reporting the slowest half-year profit growth in four years. This disappointing performance adds to the series of lackluster earnings from Chinese companies this season.

Across the broader Asian market, major indices were in negative territory, with Japan and South Korea also experiencing declines. Additionally, two-year Treasury yields, which are particularly sensitive to changes in interest rate policy, fell by three basis points.

Investor sentiment toward China soured further following a disheartening outlook from e-commerce giant PDD Holdings Inc. earlier in the week. Other key Chinese firms such as Cnooc Ltd., BYD Co., and Meituan are also set to release their earnings reports on Wednesday. In the U.S., market participants are keenly awaiting Nvidia’s earnings report, looking for indications of whether the current enthusiasm surrounding AI stocks has more room to grow.

Jun Rong Yeap, a market strategist with IG Asia Pte., noted that “the weaker performance in Asia today might be attributed to caution ahead of Nvidia’s results tonight, which could deter risk-taking.” He emphasized that “Nvidia’s results are being watched as a critical moment for global markets, given the significant optimism around AI stocks over the past year.”

In currency markets, the Japanese yen extended its losses by 0.3% against the U.S. dollar, nearing the 144.50 mark. This movement followed remarks from Bank of Japan’s Deputy Governor Ryozo Himino, who stated that the BOJ would raise interest rates as long as inflation aligns with the bank’s projections, stressing the need for “utmost vigilance” in monitoring economic developments.

Shares of Seven & i Holdings Co., which operates 7-Eleven stores, declined after the company sought a designation from authorities that could complicate potential takeover efforts. This application came on the heels of an approach by Alimentation Couche-Tard Inc. last week.

In contrast, Japanese consumer electronics giant Sony Group Corp. saw its shares rise by up to 2.7% after announcing a price increase for its PlayStation 5 in Japan. David Chao, a global market strategist at Invesco Asset Management, pointed out in a Bloomberg TV interview that “the improving economic fundamentals in Japan are more critical and will likely drive market gains in the second half of this year.”

Elsewhere in Asia, shares of BYD, China’s leading automaker, fell by up to 3.1% in Hong Kong despite positive projections about future overseas deliveries accounting for nearly half of total sales.

In the commodities sector, Fortescue Ltd.’s shares dipped by 2.7% after the world’s fourth-largest iron ore miner reported annual profits that fell short of analyst expectations due to inflationary pressures and decreased demand from China, its largest customer.

The crypto market also experienced turbulence, with Bitcoin dropping below $60,000 early Wednesday amidst a broader market retreat that saw significant declines in other major tokens like Ether.

Oil prices remained steady after falling in the previous session, ending a three-day rally. Meanwhile, gold prices retreated following a three-day advance that brought them closer to their all-time high.

Investors are bracing for significant volatility in Nvidia’s shares as the $3.2 trillion company prepares to report its earnings. Options trading suggests a potential 10% swing in either direction post-earnings announcement. Nvidia’s stock has surged approximately 160% this year and an astounding 1,000% since its bear-market low in October 2022.

Analysts are generally forecasting that Nvidia will report over 70% revenue growth for the current quarter, with some expecting even more substantial gains. The company’s performance will serve as a critical indicator of AI-related spending trends across the tech industry.

Key events to watch this week include various earnings reports and economic data releases that could impact market sentiment and investor strategies.

This story was produced with assistance from Bloomberg Automation.