European stocks reached a record high on Thursday while Asian markets fell and Wall Street futures slipped on reports that Nvidia's board is weighing the fate of CEO Jensen Huang. US Treasury yields touched 5% again and the dollar hit a 19-month high as traders bet on another Fed hike.
The STOXX 600 hit its first record high since August, but the cheer stayed mostly in Europe. Elsewhere, a spy scandal around Nvidia's chief executive rattled global stocks.
Nvidia's board meeting hits Asia and Wall Street
Reports said Nvidia's board met late Wednesday to decide whether to oust Huang after allegations that he had an affair with a suspected spy for China. The New York Times also reported that Huang had an affair with a fellow Nvidia executive.
Nvidia shares dived nearly 7% in premarket US trading, and Asian markets fell overnight. Wall Street futures were 0.5% weaker.
Chinese tech firms that use Nvidia chips for their AI models fell heavily in Hong Kong. Alibaba and Tencent tumbled 6.7% and 2.6% respectively amid concerns that Washington may curb access to offshore datacentres with the most advanced processors. Chinese domestic GPU makers, meanwhile, surged on expectations that Nvidia's troubles could help them win market share.
Jake Dollarhide, CEO of Longbow Asset Management, said according to Reuters: "It looks bad from every single angle." He does not expect the board to oust Huang until it has a known replacement from the tech sector.
Dollar and yields climb on Fed hike bets
The dollar reached a 19-month high, gaining almost 1.5% since hot inflation data earlier this week. The data triggered a repricing of expectations for another Federal Reserve rate hike next month.
A week ago, traders saw a one-in-three chance that the Fed would hold steady. Now they price a 90% chance of a 25-basis-point hike, plus 9.2% odds of a 50-basis-point hike, according to the CME Group's FedWatch tool.
The US 10-year Treasury yield briefly hit 5% in Europe, while Germany's 10-year Bund yield nudged down to 3.3%. Brent oil bounced back above $92 a barrel as tensions in the Middle East offset rising regional output.
Saxo Bank's Charu Chanana said Nvidia's earnings next Tuesday are the next key test.
Source: Reuters via Investing.com
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