Asian Stocks Drop, Yen Falls to Lowest Since 1990: Markets Wrap

(Bloomberg) — European and US equity futures slipped following weakness in Asian markets, with Meta Platforms Inc.’s disappointing outlook underscoring the risk of volatility in a high-stakes earnings week.

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The Euro Stoxx 50 contract edged down 0.2% while S&P 500 futures fell 0.8%. Stock benchmarks fell more than 1% in South Korea and Japan. Facebook parent Meta tumbled 15% in US after-hours trading as it projected second-quarter sales below analyst expectations and increased spending estimates for the year.

In addition to earnings, US economic growth figures and the Federal Reserve’s preferred inflation gauge due this week will be closely watched by traders to firm up their policy expectations. For weeks, markets have been scaling back how many rate cuts are expected from the Fed. Economists surveyed by Bloomberg predict GDP likely cooled to around 2.5% in the first quarter, with the figures still potentially suggesting persistent inflationary pressures.

The yen extended losses after weakening beyond 155 per dollar for the first time in more than three decades on Wednesday, heightening the chances of intervention ahead of Bank of Japan’s policy decision Friday.

“Meta’s not-so-upbeat outlook sent markets running for cover after-hours, which also imminently has caution spilling over for Asia markets that are already hobbled by a ‘higher for longer’ Federal Reserve and China jitters,” said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank in Singapore.

The yen depreciated to as weak as 155.74 per dollar on Thursday, a new 34-year low versus the dollar. The BOJ is forecast to keep its interest rate settings unchanged Friday, while the currency’s plunge makes it more likely the bank will tone down its stance on keeping policy easy.

“Ueda’s press conference is expected to take a hawkish tone, and even if depreciation in the yen doesn’t accelerate, the government is likely to intervene at the same time and swing the yen stronger by about 5 yen,” said Eiji Dohke, a strategist at SBI Securities. The first intervention would probably be of trillions of yen followed by smaller long-term purchases, he said.

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Story continues

Treasuries were little changed in Asia after yields rose in the previous session. Investors absorbed a $70 billion sale of five-year Treasuries on Wednesday at a slightly higher-than-anticipated yield, following an even-stronger show of demand for the auction of two-year notes on Tuesday.

In other Asian markets, stocks outperformed in Hong Kong amid increased purchases by Chinese investors. Mainland traders have snapped up $20 billion of Hong Kong stocks on a net basis since March, putting the market on track for the biggest two-month inflow since 2021, BNP strategists including Jason Lui said in a note.

Meanwhile, Secretary of State Antony Blinken said the world’s largest economies must “lay out our differences,” as he began two days of talks in China, with the threat of US sanctions targeting Beijing over its support of Russia’s war in Ukraine looming over his visit.

Also read: UBS Analyst Who Took on Evergrande Now Bullish on China Property

In the corporate world, shares of South Korea’s SK Hynix Inc. plunged even after the company said it expects a full recovery in the memory market as AI demand spurred the chipmaker to log its fastest pace of revenue expansion since at least 2010.

The stock was sold “on the news after its big gain on Wednesday — and Meta’s 15% fall is also denting investor sentiment,” said Marcello Seongsoo Ahn, a portfolio manager at Quad Investment Management Co. in Seoul.

BHP Group Ltd. has made a takeover offer for Anglo American Plc in a move that may spark the biggest shakeup of the global mining industry in over a decade.

Elsewhere, gold held a three-day drop. Oil held a modest decline, with a risk-off tone in broader markets countering a drawdown in US stockpiles.

Key events this week:

• US GDP, wholesale inventories, initial jobless claims, Thursday

• Microsoft, Alphabet, Airbus earnings, Thursday

• Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday

• US personal income and spending, PCE deflator, University of Michigan consumer sentiment, Friday

• Exxon Mobil, Chevron earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.7% as of 6:33 a.m. London time

• Nikkei 225 futures (OSE) fell 2.1%

• S&P/ASX 200 futures fell 0.8%

• Japan’s Topix fell 1.7%

• Hong Kong’s Hang Seng rose 0.4%

• The Shanghai Composite rose 0.2%

• Euro Stoxx 50 futures fell 0.2%

• Nasdaq 100 futures fell 1.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0709

• The Japanese yen fell 0.2% to 155.73 per dollar

• The offshore yuan was little changed at 7.2687 per dollar

• The Australian dollar rose 0.2% to $0.6509

• The British pound was little changed at $1.2470

Cryptocurrencies

• Bitcoin rose 0.2% to $64,184.01

• Ether rose 0.8% to $3,155.96

Bonds

• The yield on 10-year Treasuries was little changed at 4.65%

• Japan’s 10-year yield was unchanged at 0.895%

• Australia’s 10-year yield advanced 14 basis points to 4.41%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland, Youkyung Lee, Masaki Kondo and Tania Chen.

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