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Asian Stocks Poised for a Decline Following US Tech Fall
Asian shares are anticipated to open lower, influenced by the recent downturn in US tech stocks and a weakening yen, raising potential intervention concerns. Equity futures for Japan, Australia, and Hong Kong marked declines after two consecutive days of regional gains.
Tech Sector Struggles and Broader Market Impacts
The tech industry, a key driver of the recent stock market bull run, faced setbacks after Micron Technology Inc.’s outlook fell short of investor expectations, pulling down other tech giants like Nvidia Corp. US stock contracts dipped in early Asian trading hours.
The Federal Reserve announced post-market closure that major US banks had cleared the annual stress test, which could lead to increased shareholder payouts. Despite this positive note, market breadth remains weak, casting doubt on the sustainability of the current rally. Analysts point to an overreliance on big tech, with recent tech sector volatility possibly signaling deeper issues ahead.
Yen Weakens, Dollar Strengthens
The yen remained flat in early Thursday trading after a significant drop on the previous day, hitting its lowest value against the dollar since 1986. This decline, with the yen losing about 14% against the dollar this year, exceeded the intervention levels seen in April. Consequently, the dollar index rose to its highest point since November, bolstered by attractive front-end US interest rates.
Japanese markets face challenges as the Bank of Japan grapples with the yen’s depreciation, driven by strong investor demand for US assets due to favorable interest rates. Treasury yields also increased, with the 10-year yield surpassing 4.3% following a robust $70 billion sale of five-year notes.
Asian Economic Data and Policies in Focus
Economic indicators set to be released in Asia include Japan's retail sales, Australian job vacancies, and Chinese industrial profits. The Philippines will announce a monetary policy decision, adding to the regional economic developments under scrutiny.
Commodities Market Update
In commodity trading, gold prices fell to a three-week low, while West Texas Intermediate crude oil remained relatively stable. The cryptocurrency market saw minimal changes, with Bitcoin and Ether relatively steady.
Upcoming Key Events
This week promises significant economic data releases: China’s industrial profits, Eurozone’s economic and consumer confidence, US durable goods orders, jobless claims, GDP figures, and Nike’s earnings report on Thursday. Key reports on Friday include Japan’s Tokyo CPI, unemployment, and industrial production, alongside US PCE inflation, consumer spending, and University of Michigan’s consumer sentiment index. Fed’s Thomas Barkin will also present an address, making it a critical period for market watchers.
Market Movements Summary
Stocks:
S&P 500 futures fell 0.2% Hang Seng futures declined 0.6% S&P/ASX 200 futures dropped 1.1%Currencies:
The Bloomberg Dollar Spot Index rose 0.4% The euro steady at $1.0681 The yen stable at 160.72 per dollar Offshore yuan unchanged at 7.3001 per dollar Australian dollar steady at $0.6648Cryptocurrencies:
Bitcoin stable at $60,961.26 Ether increased slightly by 0.1% to $3,394.05Commodities:
West Texas Intermediate crude down 0.2% to $80.72 a barrel Spot gold prices remained unchangedThis market update adds to the narrative of economic uncertainties and market reliance on certain sectors, with significant economic data releases and policy decisions ahead.
