Asian stocks hesitant before Nvidia report, oil slips

Asian stocks have stuttered as a drop in oil prices drags bond yields lower on hopes that the critical Strait of Hormuz could reopen, while investors braced for yet another make-or-break earnings report from AI bellwether Nvidia.

Iran said it had restarted talks with Oman to manage the Strait, as it faces heightened economic pressure from US President Donald Trump in the nearly six-month conflict that has roiled oil markets and stoked global inflationary worries.

Brent crude futures fell for a third straight day on Wednesday, sliding more than two per cent to $US86.41 ($A120.72) per barrel on the prospect of more supply coming through the strait, which handled a fifth of the world's traded oil before the war.

That helped push bond yields lower, with the yield on US 10-year notes at 4.634 per cent after falling 6.5 basis points on Tuesday.

"While there was no real progress or details of the Iran-Oman deal, as Iran reiterated that Hormuz will remain shut until conditions are met, price action suggested that markets are quickly pricing in optimism around an interim announcement," analysts at J.P. Morgan said in a note.

Investors turned cautious ahead of Nvidia's second-quarter earnings later in the day, with their focus on whether the massive AI spending boom is sustainable and can turn profits that will satisfy markets.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.12 per cent in early trading, set for a two per cent rise in the month. Japan's Nikkei eased 0.4 per cent while the tech-heavy KOSPI dipped 0.2 per cent.

Nasdaq futures fell 0.5 per cent, while European futures were flat in Asian hours.

"Nvidia is approaching the point where beating expectations is expected, so the headline numbers alone may not determine the market reaction," said Charu Chanana, chief investment strategist at Saxo in Singapore.

"The question is less whether Nvidia beats and more how big the beat is and whether guidance is strong enough to keep earnings expectations moving higher," Chanana said.

She pointed out that options data hints at a smaller move after earnings compared to previous profit announcements, suggesting Nvidia's results are becoming somewhat more predictable.

Analysts expect Nvidia to forecast an 82.8 per cent rise in third-quarter sales to $US104.20 billion ($A145.58 billion). Adjusted gross margin for the second and third quarters is expected to remain around 75 per cent.

JP Morgan analysts said it was likely that Nvidia's earnings release will be "supportive of the AI trade though perhaps without giving a material near-term boost" to the semiconductor sector.

The currency markets remained calm with the dollar holding steady as traders awaited the latest US inflation data later in the day, ahead of the Jackson Hole symposium this weekend.