Morning Bid: Nvidia vigil

By Mike Dolan

May 20 (Reuters) - What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

With Nvidia’s first-quarter results due after Wednesday's bell, traders are braced for big stock movements, with options markets pricing in a 6.5% swing in ‌either direction.

That isn’t historically big in percentage terms, but it’s equivalent to about $350 billion in market cap - more than the combined value ‌of 90% of S&P 500 firms.

I’ll get into that and more below.

But first, check out my latest column on the link between the AI boom and rising bond yields.

And listen to ​the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

NVIDIA VIGIL

The soaring AI capex outlays already outlined throughout the current earnings season make it hard to be downbeat about what Nvidia’s results might reveal. As ever, though, the bar will be sky-high for the AI giant to meet already pumped-up expectations, which have helped lift its stock another 18% or so this year.

It hasn’t ‌all been smooth sailing for chip stocks, with ⁠South Korea’s Samsung slipping over 1% on Wednesday as its union said it would go ahead with an 18-day strike from Thursday. The broader KOSPI index fell by 1.7%, while Japan’s Nikkei was down 1.5%.

Meantime, Wall Street indexes fell back ⁠again on Tuesday on renewed bond stress, as 30-year Treasury yields spiked once more to touch their highest level since 2007. 10-year yields also rose, hitting their highest level of Donald Trump’s second term so far.

A 20-year bond auction later today will be watched closely, as will the release of the minutes from the Fed’s ​April ​policy meeting. The minutes may shed more light on three policymakers’ dissent over an ​apparent “easing bias” in the last Fed statement.

Fed futures are almost ‌80% priced for a rate hike this year as the Iran war stalemate continues and still-elevated oil prices stoke inflation. With Trump nominee Kevin Warsh set to take the reins at the Fed soon, the president has changed his tune on demanding immediate rate cuts, telling the Washington Examiner he’ll let Warsh “do what he wants to do”.

Brent crude continues to trade at well over $100 per barrel, but dipped back below $110/bbl on Wednesday morning after President Trump again talked up prospects for an end to the Iran conflict. He balanced that, however, with more threats of military action if a peace deal isn't ‌reached.

Elsewhere in geopolitics, talks between Chinese President Xi Jinping and Russian President Vladimir Putin ​got underway in Beijing, with possible coordination on energy coming into focus.