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US, European stocks drop despite China rate cut

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All three major US indices pulled back, with the tech-heavy Nasdaq dropping nearly 1% ahead of chip titan Nvidia’s results on Wednesday

Wall Street and European stocks mostly dropped on Tuesday, as gains in Asia following a China central bank interest rate cut failed to carry over while Nvidia weighed on the Nasdaq.

All three major US indices pulled back, with the tech-heavy Nasdaq dropping nearly 1% ahead of chip titan Nvidia’s results on Wednesday.

Coming off the three-day weekend, the US equity market looks like it is having vacation-withdrawal symptoms, said analyst Patrick O’Hare at Briefing.com.

There just isn’t much of a buying impulse at the moment in the wider market, as participants are in a wait-and-see mode, he said.

Traders are anxious to see if there will be a buy-the-dip effort after Friday’s losses, and to see how the market responds to Nvidia’s earnings report, he added.

Equities in the US and Europe have repeatedly set record highs in recent months on expectations of rate cuts and strong earnings by tech companies doped by enthusiasm for AI.

In Europe, the Paris stock market gained, aided by solid results from industrial gas giant Air Liquide, but Frankfurt and London slipped.

Wall Street’s main indices were also down after the three-day holiday weekend. US stocks ended last week out on a weak note after inflation topped estimates, denting hopes for a swift shift from the Fed to rate cuts.

This week’s calendar includes policy meeting minutes from the Federal Reserve and ECB, on Wednesday and Thursday respectively.

Chinese shares were buoyant after the Lunar New Year, leading gains in most Asian markets thanks to a holiday boost, although Tokyo dropped on profit-taking.

China provided a fresh boost to risk appetite after the PBoC announced cuts in another step to the nation’s economic stimulus policy, said ActivTrades analyst Pierre Veyret.

The PBoC announced it was reducing the five-year LPR, used to price mortgages, from 4.2 to 3.95%.

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