By Koh Gui Qing and Tom Wilson
NEW YORK/LONDON World stocks receded on Thursday as investors took a breather after bets that tech darling Nvidia will deliver blockbuster results paid off, while Treasury bond yields edged back higher following a big sell-off.
Profit-taking weighed on shares across the board, with the MSCI All Country stock index down 0.36%. In the United States, the Dow Jones lost 0.35%, the S&P 500 fell 0.57% and the Nasdaq Composite slid 1.04%. [.N]
Investors are now waiting for a speech by Federal Reserve Chairman Jerome Powell on Friday at a central bank summit in Jackson Hole, Wyoming, for clues on the U.S. interest rates outlook, though Federal Reserve Bank of Philadelphia President Patrick Harker gave a sign of things to come.
Harker said in an interview on Thursday that he doubted the Fed will need to raise rates again, but also indicated he was not ready to predict when the Fed might start cutting rates.
"Right now I think that we've probably done enough" and it is probably a good idea to hold steady for the rest of this year and see how that affects the economy, Harker told CNBC.
Profit-taking also took hold in Europe, where European stocks gave up earlier gains to edge down 0.37%.
"To see what Jerome Powell now says in the light of some weaker underlying economic data - how he's going to message? Are we at the peak? Are we going to hold? - I think it's the absolutely crucial thing," said Robert Alster, chief investment officer at Close Brothers Asset Management.
Nvidia jumped 1.4% after the company's revenue forecast demonstrated how a boom in generative AI technologies that can read and write in human-like ways - and powered almost exclusively by Nvidia's chips - shows no signs of slowing down.
Elsewhere, the Turkish lira leapt more than 2% to 26.605 versus the dollar after a bigger-than-expected 750 basis-point rate hike, with stocks on the country's main banking index gaining more than 9%.
EASING YIELDS
Government bond yields eased, adding to a sense of relief across markets.
Euro zone yields hit multi-week lows with Germany's 10-year yield 1.5 bps lower at 2.50%, having touched a 2-week low of 2.448%.
The yield on benchmark 10-year Treasury notes reached 4.214%, compared with its U.S. close of 4.198% on Wednesday, when it eased from near 16-year highs after weak business activity data from the United States and the euro zone.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.5% higher, also lifted by Nvidia's bullish outlook.
Still, the index is down about 8% so far this month due to weakness in China's economy and yuan, as well as some gloomy factory readings from Japan, which also left sentiment fragile.
China stocks also rebounded on Thursday, however, with the blue-chip CSI300 index advancing 0.7%.
In currency markets, the dollar index, which measures the greenback against a basket of six other major currencies, added 0.474%, and remains higher over the month.
The euro lost 0.33% against the dollar, which earlier nursed some losses against Asian currencies, clipped by the softer-than-expected global economic data.
The Chinese yuan inched higher as the central bank continued to fix the daily mid-point at stronger-than-expected levels.
"With the Chinese currency edging higher today, foreign capital has flowed back in to and helped stabilise China's stock markets," said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
Oil prices were lower. Brent crude futures fell 0.18% to $83.07 per barrel and U.S. West Texas Intermediate crude futures edged down to $78.81, while gold was 0.28% higher at $1,918.10 per ounce. [O/R] [GOL/]
(Reporting by Koh Gui Qing in New York and Tom Wilson in London; Additional reporting by Julie Zhu in Hong Kong; Editing by Kirsten Donovan and Matthew Lewis)