Morning Bid: Nvidia earnings take the spotlight

A look at the day ahead in European and global markets from Rae Wee

Earnings results from Nvidia will be the marquee event for markets on Wednesday, with all eyes on how much U.S. technology curbs on China will cost the AI bellwether.

Company watchers expect the chip giant to report a 66.2% surge in first-quarter revenue to $43.28 billion, however uncertainty surrounding its China business looms large even as a pullback in other regulations is set to open up new markets.

As it is, traders in the options markets are bracing for industry-wide volatility after the results, with defensive options contracts on a major semiconductor ETF drawing heavy attention.

Earnings aside, investors will also be watching developments in global bond markets after demand on Wednesday for Japan's 40-year government bond auction was its lowest since November, underscoring the market's diminishing capacity to absorb new debt.

Long-end yields have surged worldwide in recent weeks on a heavy selloff in bonds as concern mounts over fiscal deficits, particularly in developed nations such as the U.S. and Japan.

Worries over tax cuts and that the United States' chaotic tariff policy will stoke inflation and propel government spending have made investors increasingly nervous about holding long-dated sovereign debt.

On Tuesday, Reuters' exclusive report that Japan is considering trimming the issuance of super-long bonds was followed by a drop in both yields and the yen.

Yields on Japanese government bonds were little changed following Wednesday's auction. U.S. Treasury yields edged up slightly after falling the previous day.

Over in New Zealand, the central bank cut its benchmark interest rate by 25 basis points and flagged a slightly deeper easing cycle than it forecast three months ago, underlining risk to economic growth from a sharp shift in U.S. trade policy.

Key developments that could influence markets on Wednesday:

* North America earnings: Nvidia, Bank of Montreal, NationalBank of Canada, DICK'S Sporting Goods, Macy's * U.S. auction of two-year floating rate, five-year notes * German auction of 15-year Federal bonds * German unemployment data for May * France Q1 GDP final reading, producer prices for April

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(By Rae Wee; Editing by Christopher Cushing)