Ahead of tomorrow’s Nvidia earnings fireworks, it’s another quiet session with most asset classes close to unchanged and US equity futures flat in a muted overnight session. As of 8:00am, S&P futures were unchanged after trading in a narrow range, and erasing modest earlier gains, while Nasdaq futures rose 0.1% with tech leading as NVDA/TSLA edge higher after lagging the Mag7 yesterday. Bond yields continued to rise amid a steeper curve, pushing the 10Y 3bps higher to 3.85%, while the USD is weaker and commodities are lower ex-base metals and natgas. Today’s macro data focus is on Consumer Confidence, Housing Price updates, and regional activity indicators. There is a 2Y bond auction.

In premarket trading, Paramount Global fell after Seagram’s heir Edgar Bronfman Jr. dropped out the acquisition contest for the CBS parent, with producer David Ellison’s Skydance Media set to become the new owner. Nvidia shares erased earlier gains and were last trading flat. Here are other notable premarket movers:

Cava Group (CAVA) falls 8% after the Mediterranean restaurant chain’s largest individual shareholder and a group of executives filed to sell shares.
Hershey (HSY) slips 1.7% after Citi downgraded the chocolate bar maker to sell, saying volume weakness and cocoa inflation presents a looming downside risk.
JD.com (JD) gains 3% on plans to buy back as much as $5 billion of its shares in a move to appease investors worried about a potentially worsening Chinese consumer downturn.
Leslie’s (LESL) rises 2% after the outdoor supplies and sporting goods retailer named Jason McDonell as CEO and reaffirmed its fiscal 2024 outlook.
Eli Lilly & Co. (LLY) ticks 0.6% lower as the company is now selling Zepbound vials at 50% discount to popular shots.
Paramount Global (PARA) drops 5% as Seagram Co. heir Edgar Bronfman Jr. dropped out of a bidding war for the media company.
Trip.com (TCOM) jumps 8% after the Chinese online travel agency reported second-quarter revenue and earnings that beat estimates.

Slowly but surely, all eyes now turn to Nvidia, and arguably the most important earnings release of the quarter; the company has the second-biggest weighting in the S&P 500 after Apple but has far greater importance on the broader “AI narrative”, and its nosebleed valuation mean that it’s susceptible to big swings that could reverberate widely. As noted yesterday, pricing in the options market shows that traders see the potential for an almost 10% move in either direction after earnings, which would translate to roughly 160 points in the Nasdaq 100 Index, or a 0.8% move.

Nvidia’s “numbers will be good but what matters is the guidance in order to understand if the demand is still healthy,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “If we get bad news, the rotation will be ever stronger as the market is still very heavy on the mega-cap.”

Investors will also hope the bull market will broaden out of big tech after fed Chair Jerome Powell signaled Friday the central bank will cut rates soon. Other policy makers echoed his dovish tone: Fed Bank of San Francisco President Mary Daly said it’s appropriate to begin cutting rates, while her Richmond counterpart Thomas Barkin said he still saw upside risks for inflation, though he supported “dialing down” policy. Economists see the core PCE index rising 0.2% in July for a second month. That would pull the three-month annualized rate of core inflation down to 2.1%, just above the central bank’s 2% goal.

“Of course, the central bank will emphasize that it has not yet made a decision and wrap that in the words ‘data dependent’,” said Volkmar Baur, a strategist at Commerzbank AG. “But 95 percent of what it needs to know for its September meeting should already be available.”

Europe’s Stoxx 600 Index rose 0.2% to their highest since mid-July amid low trading volumes, with declines for retailers offsetting gains for carmakers and miners. Major European markets are mostly higher with Italy/Spain leading and only SCXP in the red. Trading volumes were low, with activity on most European benchmarks about three-quarters of the average level from the past 30 days.   Associated British Foods declined as Deutsche Bank cut its rating on the stock to sell from hold. Ryanair led gains in European airline and travel stocks after CEO Michael O’Leary said a softening in fares experienced between April and June has levelled out. Bunzl Plc shares soared after the distribution group raised its full-year profit guidance. Here are some of the other biggest movers on Tuesday:

Bunzl shares surge 12% to a record intraday high after the British distribution firm upgraded its 2024 margin guidance and announced a new share buyback program. Citi analysts say “strong” margin growth has been helped by acquisitions and a shift toward own brand penetration.
Continental shares rise as much as 4.6% after the German auto parts maker gets upgraded to buy at UBS, which says that the proposed autos spin-off would unlock full potential in tires and the cash return story is not yet priced in.
Accelleron gains as much as 4.9% after the Swiss engine parts maker reiterated its guidance and posted strong results boosted by the shipping sector, according to Vontobel.
Harbour Energy shares jump as much as 8.4%, the most since May, after the UK oil and gas company said it had made “considerable progress” on its Wintershall Dea acquisition, which may be completed in early September, sooner than originally expected.
Associated British Foods shares fall as much as 3.5% after the Primark owner is downgraded to sell from hold at Deutsche Bank, its first sell rating since April, according to data compiled by Bloomberg. The broker takes a more cautious view on the stock, saying that ABF’s profit recovery phase has come to an end.
Zurich Airport shares fall as much as 6.9%, the most since 2021, after its first-half Ebitda missed analyst estimates due to higher costs. Stifel analysts also note the company slightly delayed the inauguration of its Noida airport in India.

Earlier in the session, Asian stocks fell, dragged down by major technology shares ahead of Nvidia’s earnings report on Wednesday, with disappointing results from Chinese e-commerce firm PDD also weighing on sentiment. The MSCI Asia Pacific Index dropped as much as 0.5% before paring some of the losses, with Alibaba and TSMC among the biggest drags. Shares fell in mainland China, Taiwan and South Korea. A gauge of Chinese tech names slid after PDD’s warning of slowing sales. Chip stocks followed US peers lower on renewed concerns over the sustainability of artificial intelligence demand ahead of Nvidia’s results and repositioning ahead of expected Federal Reserve rate cuts. The recent tech selloff had begun to ease, putting the Asian benchmark back on track for a fourth-straight monthly gain.

“Asian markets should benefit from the recent weakness in the US dollar,” said Gary Dugan, chief executive officer of the Global CIO Office. “A cut in interest rates should allow Asian countries to follow their own timely plans on rate cuts as their currencies will be under less pressure.”

In FX, the Bloomberg Dollar Spot Index is little changed; the pound is the best performer among the G-10 currencies, extending gains by 0.4% against the greenback to its highest since March 2022 as options show traders see upside risks for sterling into the September central bank meetings. The Japanese yen is the weakest, falling 0.2% to around 144.8 per dollar.

In rates, gilts led a selloff in European government bonds while Treasuries also fall. US 10-year yields rise 4bps to 3.85% as US trading day begins, trailing bigger declines in most European bond markets, as focus shifts to supply, pushing the 10Y yield 3bps higher to 3.85%. August’s last three Treasury coupon auctions begin with $69b 2-year note sale at 1pm New York time, and corporate bond supply historically has been heavy in early September. Yields are higher by 2bp-3bp with the curve steeper, 2s10s and 5s30s each by ~1bp; volume and liquidity “remain in summer mode,” Citi rates strategist Edward Acton says in a note. In Europe,

In commodities, oil prices decline, paring some of Monday’s rally, with WTI down to ~$76.70 a barrel. Spot gold falls $6 to around $2,511/oz.

Looking at today’s calendar, the US economic data calendar includes June FHFA house price index and S&P CoreLogic home price indexes (9am), August Conference Board consumer confidence gauges and Richmond Fed manufacturing index (10am) and August Dallas Fed services activity (10:30am)

Market Snapshot

S&P 500 futures up 0.1% to 5,643.50
STOXX Europe 600 up 0.3% to 519.81
MXAP down 0.2% to 185.49
MXAPJ down 0.3% to 575.85
Nikkei up 0.5% to 38,288.62
Topix up 0.7% to 2,680.80
Hang Seng Index up 0.4% to 17,874.67
Shanghai Composite down 0.2% to 2,848.73
Sensex up 0.2% to 81,857.29
Australia S&P/ASX 200 down 0.2% to 8,071.20
Kospi down 0.3% to 2,689.25
German 10Y yield up 2 bps at 2.27%
Euro little changed at $1.1172
Brent Futures down 0.3% to $81.21/bbl
Gold spot down 0.3% to $2,510.49
US Dollar Index little changed at 100.84

Top Overnight News

Decision Desk HQ Presidential Forecast (8/26) Probabilities: Harris: 54.6%, Trump: 45.4%.
Mark Zuckerberg said the Biden administration pressured Facebook to censor Covid-related posts in 2021 and that he regrets the decision to accede to the demands. BBG
Republican Presidential Candidate Trump said he would like Tesla (TSLA) CEO Musk in Cabinet, but Musk is busy with his businesses; the time has come for a space national guard.
Profits at China’s industrial companies rose at the fastest pace in five months in July, though weak domestic demand is calling into question whether their resilience can last. Industrial profits at large Chinese companies expanded 4.1% on year in July, after a 3.6% gain the previous month. BBG
Chinese export controls on crucial semiconductor materials are hitting supply chains and stoking fears of shortfalls in western production of advanced chips and military optical hardware. FT
German consumer sentiment has weakened once again, as a one-off boost from the European soccer championship in the country faded, compounding concerns that Europe’s largest economy will fail to mount a sustained recovery this year. WSJ
The near-term risk of a broader war in the Middle East has eased somewhat after Israel and Lebanon’s Hezbollah exchanged fire without further escalation but Iran still poses a significant danger as it weighs a strike on Israel, America’s top general said on Monday (General CQ Brown). RTRS
Goldman reduced its range for Brent prices by $5/bbl to $70-85, and the 2025 average Brent forecast to $77/bbl (vs. $82 prior), reflecting upside surprises to OECD inventories and a lower fair value estimate for long-dated prices. Cruically, the bank assumes that OPEC will raise production in Q4 as the market is potentially shifting from an equilibrium where OPEC supports spot balances and reduces volatility to a more long-run equilibrium focused on strategically disciplining non-OPEC supply and supporting cohesion: Goldman
IPO outlook softens for the balance of 2024, as many companies defer plans to 2025 given potential volatility around the US election, Fed easing, etc. WSJ
Apple named Kevan Parekh as CFO, replacing Luca Maestri. The company will hold its iPhone 16 launch event on Sept. 9. BBG
Skydance is set to become the new owner of Paramount after Edgar Bronfman Jr. dropped out of the bidding. The studio expects to complete the deal in 2025. Bronfman pulled out partly because of the process’s tight deadline, a person familiar said. BBG
Microsoft (MSFT) CEO Satya Nadella reported open market sale of 14,398 shares of Microsoft at an average price of USD 417.412/shr on Aug 23rd (vs Monday’s close of USD 413.49/shr), according to an SEC filing.
Mexico lower house committee approves proposed judicial reform, paves way for final debate by early September, according to Reuters.
UBS Global Wealth Management has increased odds of a US recession to 25% from 20%

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly lower following a mixed lead from Wall Street, which saw the tech sector lag ahead of NVIDIA earnings on Wednesday. News flow in APAC hours was quiet and catalysts light, with the overall tone of the market tentative. ASX 200 saw its early modest gains fade with the index trading flat throughout most of the APAC session, although BHP shares were lifted some 2% following earnings. Nikkei 225 opened in the red but gradually edged higher in tandem with the weakness in the JPY, with the index confined to a tight intraday range. Hang Seng and Shanghai Comp were both subdued for the entirety of the session, with the mainland overlooking an improvement in Industrial Profits, whilst Hong Kong saw its hefty losses in Alibaba and JD.com after Temu-owner PDD tumbled 28.5% after cautioning that its revenue growth will slow as competition continues to increase.

Top Asian News

BHP (BHP AT) – FY (USD): Revenue USD 55.7bln (exp. 55.971bln). Underlying profit 13.66bln (exp. 13.49bln). Dividend 0.74, Co. expects volatility in the global commodity market in the near term.
PBoC injected CNY 472.5bln via 7-day Reverse Repo at a maintained rate of 1.70%.
Japanese gov’t to spend JPY 980bln to fund electricity/gas subsidies from the FY24/25 budgets reserves, via NHK.

European bourses, Stoxx 600 (+0.4%) are modestly firmer across the board, with indices slowly edging higher as the session  progressed. European sectors are mostly firmer; Basic Resources takes the top spot, benefiting from underlying strength in metals prices and after BHP earnings overnight. Retail is found near the foot of the pile. US Equity Futures (ES +0.1%, NQ +0.2%, RTY +0.2%) are modestly firmer across the board, continuing the optimism seen in early European trade. The docket for the remainder of the day is fairly thin, with focus on the Richmond Fed Index and Fed Discount Rate Minutes.

Top European News

Macron Continues Premier Talks After Rejecting Leftist Pick
European Stocks Gain With Focus on US Inflation, Nvidia Results
Klarna CEO Invests in Elon Musk’s SpaceX Through Flat Capital
Ryanair Doesn’t See Double-Digit Declines in 2Q Avg Fares: Rtrs

FX

DXY is flat with the USD showing differing performance vs. peers. For now DXY is still unable to test 101.00 to the upside with the pre-Powell peak residing at 101.55.
EUR is marginally firmer vs. the USD but ultimately unable to launch a retest of the 1.12 mark after briefly breaching the level yesterday. German GDP confirmed the bleak growth picture for the nation but ultimately failed to sway price action.
Cable is back on a 1.32 handle after bottoming out around the 1.3180 mark yesterday and overnight. UK-specifics light.
JPY is the marginal laggard across the majors in a mild extension of yesterday’s price action. 145.17 is the high thus far with the next level of note to the upside coming via the high from Friday at 146.48.
Antipodeans are both marginally firmer vs. the USD with AUD/USD still holding below the 0.68 mark. Similar price action for NZD/USD with focus on whether it can eclipse Friday’s 0.6236 high which was the highest level since January.
PBoC set USD/CNY mid-point at 7.1249 vs exp. 7.1245 (prev. 7.1132)
Barclays passive month-end rebalancing model: weak USD selling against most majors and neutral against EUR and JPY.

Fixed Income

USTs are under modest pressure but very much towards the top-end of the bullish-move that has been in-play since early-July. Docket ahead is devoid of Fed speak but does feature a handful of data points and then 2yr supply. At a 113-14+ WTD low, support comes into play at Friday’s 113-08+ and then Thursday’s 113-05+ base.
Bunds are softer, and below the 134.00 mark which hadn’t been breached to the downside since August 8th; no real move to another set of poor German data, this time via GfK. Currently at the low-end of 133.92-134.28 bounds. Bunds were unmoved by the German Bobl auction.
Gilts opened around 30 ticks below Friday’s 99.94 base, with the region catching up to Monday’s price action. Since, the benchmark has waned further in-line with broader fixed action and finds itself at a 99.38 trough.
Italy sells EUR 2.5bln vs exp. EUR 2.0-2.5bln 3.10% 2026 BTP Short Term: b/c 1.54x (prev. 1.50x) & gross yield 2.89% (prev. 3.10%)
Germany sells EUR 3.35bln vs exp. EUR 4.00bln 2.50% 2029 Bobl: b/c 2.2x (prev. 1.90x), average yield 2.17% (prev. 2.09%) & retention 16.25% (prev. 17.9%)

Commodities

A softer start for the crude complex, with prices drifting away from the prior day’s best levels, sparked by Libya’s oilfield production halts. The complex continues to await an update from Cairo talks which were said to have begun late-Monday. Brent currently trading around USD 80.90/bbl with the magnitude of pressure increasing throughout the European morning.
Spot gold is a touch softer with the narrative somewhat similar to that of crude as the lack of escalation means Monday’s haven premia is waning. Holding around yesterday’s USD 2508/oz base currently.
Base metals are firmer as the LME returns from Monday’s Bank Holiday. However, upside thus far is modest in nature with 3M LME Copper only just above the USD 9.3k mark as the complex generally digests bearish commentary from BHP.
Two oilfields in Southeast Libya have shut down whilst another has reduced production to its lowest capacity, according to engineers

Geopolitics: Middle East

Top US general said the immediate risk of a broader war in the Middle East has eased somewhat after the Israel-Hezbollah clash, but Iran still poses significant danger as it weighs strike on Israel, according to Reuters.

Geopolitics: Ukraine

Explosions were heard for the third time overnight in the Ukrainian capital Kyiv, according to Reuters.
Russian Defence Ministry says Russia carried out high-precision weapon strike on Ukraine overnight, via Interfax

US Event Calendar

09:00: June S&P Case Shiller Composite-20 YoY, est. 6.14%, prior 6.81%
June S&P/Case Shiller 20 City MoM SA, est. 0.30%, prior 0.34%
June S&P/Case-Shiller US HPI YoY, prior 5.94%
June FHFA House Price Index MoM, est. 0.1%, prior 0%

10:00: Aug. Conf. Board Consumer Confidenc, est. 100.9, prior 100.3
Aug. Conf. Board Expectations, prior 78.2
Aug. Conf. Board Present Situation, prior 133.6

10:00: Aug. Richmond Fed Index est -14, prior -17,
10:30: Aug. Dallas Fed Services Activity, prior -0.1