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European stocks are expected to open slightly higher Thursday as global market sentiment dips.
The U.K.'s FTSE 100 index is expected to open 24 points higher at 8,101, Germany's DAX up 56 points at 19,053, France's CAC up 2 points at 7,202 and Italy's FTSE MIB up 25 points at 33,350, according to data from IG. Data releases due Thursday include French business confidence data.
Market sentiment was knocked overnight as investors parsed the all-important earnings release from artificial intelligence darling Nvidia amid lofty expectations of the company.
While the chipmaker reported a 94% year-on-year surge in revenue for the third quarter to $35.08 billion, it was still a consecutive slowdown from the previous three quarters, when sales rose 122%, 262%, and 265%, respectively. Despite exceeding expectations for the third quarter and providing strong guidance, shares of Nvidia slid nearly 2% in extended trading.
Asia-Pacific markets mostly fell overnight, while futures tied to the Nasdaq 100 also slipped.
Asian semiconductor-related stocks mostly slumped on Thursday after Nvidia reported an earnings forecast that failed to meet the lofty expectations of some investors.
While Nvidia's third-quarter results exceeded analysts' expectations and delivered a strong forecast for the current quarter, its shares still shed 2.5% in extended trading to roughly $142.20 apiece.
"No matter how good the company does ... if the guide is anything less than the high end of the whisper, you will probably see some selling pressure," Daniel Newman, CEO at the Futurum Group, told CNBC's "Squawk Box Asia" following the report.
The sentiment has spilled over to Asia, with stocks tied to Nvidia suppliers as well as other chip companies mostly falling.
India's Adani Group saw shares of its companies plunge Thursday after its billionaire chairman Gautam Adani was indicted in a New York federal court over his alleged involvement in an extensive bribery and fraud operation.
The 62-year-old billionaire and the seven other defendants have been accused of paying over $250 million in bribes to Indian government officials to secure solar energy contracts that could generate more than $2 billion in profits.
Asian markets will look "very different" in 2025 in light of China's new policy measures, the slowing Indian economy and Southeast Asian countries' investments into new infrastructure, according to HSBC.
Still, several stocks can "benefit from these changes in Asia as they are best positioned to capture growth from these opportunities and that our analysts like from a bottom-up perspective," the bank's analysts noted.
"In highlighting these stocks, we decided to look outside of consensus ideas, which are generally well owned, and our aim is to highlight quality stocks that are relatively underappreciated," they said, naming three of their top ideas.
The stock market has always pulled back when valuations are stretched as they are now, according to Deutsche Bank macro strategist Henry Allen in a note to clients this week.
"[T]urning points can happen quickly, and ... when valuations are stretched to start with, there can be limited scope for further gains," Allen noted. "[E]xamples of high returns through history have often been followed by sizeable reversals."
The bank cited lofty current readings in the Cyclically Adjusted Price-to-Earnings (CAPE) ratio developed by economist Robert Shiller, arguing that "the CAPE ratio for the S&P 500 has only been higher on two other occasions in the last century" than it is today.
During the dot-com bubble of the late 1990s and the period before the Global Financial Crisis in 2008, "there was little scope for further gains since valuations were already so stretched to start with, and they were each followed by a significant correction," Allen wrote. "Indeed, on both the occasions the CAPE ratio has got as high as it is today, there was then a significant correction."
-- Scott Schnipper
Federal Reserve Governor Michelle Bowman said Wednesday that progress on bringing inflation back to the central bank's goal has slowed.
"We have not yet met our inflation goal and, as I noted earlier, progress in lowering inflation appears to have stalled," Bowman said in remarks in West Palm Beach, Florida. "I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment, but it is also possible that we could see a deterioration in labor market conditions."
Recent data has indicated that the Fed has neared its 2% inflation target, though the all-items consumer price index nudged higher in October and the core rate indeed has held steady around 3.3% since August.
Inflation concerns caused Bowman to vote against the half-percentage-point interest rate cut in September, though she did vote for the quarter-point reduction earlier this month, which she would have preferred for the initial move. The policymaker said she approaches her role "in an independent way, relying on facts, analysis, my own experience and judgment," and with the inflation mandate in mind.
"In some cases, this approach has led me to depart from the views of my colleagues," she said.
-- Jeff Cox
European markets are expected to open higher Wednesday.
The U.K.'s FTSE 100 index is expected to open 4 points higher at 8,106, Germany's DAX up 46 points at 19,108, France's CAC up 23 points at 7,252 and Italy's FTSE MIB up 118 points at 33,567, according to data from IG.
Earnings are set to come from Severn Trent and British Land. Data releases include U.K. inflation figures.