Stock markets retreat ahead of Nvidia earnings

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US and European stock markets retreated on Wednesday as investors eagerly awaited results from artificial-intelligence giant Nvidia.

The dollar firmed against rivals as US president-elect Donald Trump works on completing his cabinet picks, the outlook for US interest rates and the prospect of an escalation in the Russia-Ukraine war.

"One of the most highly anticipated days of the earnings season, if not the most, the Nvidia earnings day, is finally here," noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Shares in US chip behemoth Nvidia fell 1.7 percent at the start of trading. The company releases its third-quarter earnings after US markets close.

Many investors see the company as a bellwether for the tech sector and artificial-intelligence demand that have helped power Wall Street to multiple record-highs this year.

"It is rare that a single stock dominates the global financial space, however, tonight’s earnings report from Nvidia seems like a pivotal moment for global financial markets," said Kathleen Brooks, research director at XTB.

"A stunning earnings report could reenergize the AI trade and the entire US stock market rally, however, a disappointing report could trigger risk-off sentiment," she added.

Shares in Target plunged more than 20 percent at the open of trading after the retailer issued lacklustre results and disappointing guidance.

Investors are treading carefully this week amid uncertainty after Trump's re-election and as he picks his cabinet, with several China hawks up for key positions fanning worries of another trade war between the economic superpowers.

On Tuesday he named China hawk Howard Lutnick as commerce secretary and Wall Street is waiting on tenterhooks for news of his pick for treasury chief.

Trump has pledged to ramp up tariffs on imports, with China particularly in his sights, but observers warn that such a move -- along with planned tax cuts -- could relight still stubborn inflation.

That has dampened hopes for several interest-rate cuts next year from the US Federal Reserve.

The war in Ukraine has also burst back into the thoughts of traders this week.

Markets briefly slumped on Tuesday after President Vladimir Putin signed a decree lowering the threshold for using nuclear weapons.

Key figures around 1430 GMT

New York - Dow: UP 0.1 percent at 43,321.99 points

New York - S&P 500: DOWN less than 0.1 percent at 5,913.58

New York - Nasdaq Composite: DOWN 0.2 percent at 18,957.80

London - FTSE 100: UP less than 0.1 percent at 8,103.82

Paris - CAC 40: FLAT at 7,228.26

Frankfurt - DAX: UP less than 0.1 percent at 19,075.44

Tokyo - Nikkei 225: DOWN 0.2 percent at 38,352.34 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 19,705.01 (close)

Shanghai - Composite: UP 0.7 percent at 3,367.99 (close)

Euro/dollar: DOWN at $1.0539 from $1.0599 on Tuesday

Pound/dollar: DOWN at $1.2651 from $1.2682

Dollar/yen: UP at 155.73 yen from 154.67 yen

Euro/pound: DOWN at 83.31 pence from 83.54 pence

Brent North Sea Crude: UP 0.6 percent at $73.71 per barrel

West Texas Intermediate: UP 0.7 percent at $69.72 per barrel