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Share markets drop as UK inflation offsets Nvidia hopes


European stocks slipped 0.3% in early trading, after earlier being set for narrow gains

Share markets dropped on Wednesday as stronger-than-expected inflation in Britain offset investor hopes that AI-heavyweight Nvidia could meet sky-high expectations, with the market also waiting for possible clues on when the U.S. Fed will begin to ease interest rates.

European stocks slipped 0.3% in early trading, after earlier being set for narrow gains. Britain’s FTSE 100 led losses among regional markets with a 0.6% decline.

Inflation in Britain declined by less than expected in April and a key core measure barely declined, triggering a jump in the pound and in British government bond yields, as well as prompting investors to pare their bets on a BoE interest rate cut in June.

The data underscored jitters over whether central banks would move as quickly as markets hope to cut interest rates.

Still, investors awaited an earnings report from U.S. AI-heavyweight Nvidia, which is set to report after the market close.

Nvidia’s earnings are set to provide the latest test for a U.S. stock market rally that has taken indexes to record peaks in 2024, with the company’s influence on wider markets growing.

With Nvidia’s chips the gold standard in artificial intelligence, its results are widely seen as a barometer for the growing AI industry, whose evolution has stoked investor enthusiasm and helped drive the bull run in U.S. stocks.

Turbulence could follow, with options priced for a swing of 8.7% in either direction, worth $200 billion in market value.

This is a pivotal event, Deutsche Bank analysts wrote. It might seem strange that markets are hanging on the results of a single firm, but over recent quarters, the release has become one of the most important events on the macro calendar.

S&P 500 futures and Nasdaq futures were flat.

The MSCI world equity index, which tracks shares in 47 countries, was also flat.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3%, having already jumped for four consecutive weeks to hit a two-year top.

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