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Market Update: Asian Shares Decline; Yen Trims Losses

Asian shares took a hit today after US tech companies saw a drop in late trading. Meanwhile, the yen stabilized following a significant slide on Wednesday, which led to speculation about possible intervention by officials.


Market Performance

Stocks in Japan, Australia, and China declined, with the MSCI Asia Pacific index heading for its first loss in three days. US equity futures also slipped as tech giant Micron Technology’s poor sales outlook affected the market. The yen saw a slight recovery after falling 0.7% the previous session, hitting its weakest point since 1986. Overall, the yen has lost over 12% against the dollar this year.

Currency and Bond Markets

An emerging-market currency gauge dropped to its lowest in two months, and Asian currencies fell to levels last seen in 2022. Treasuries continued to decline amid concerns that upcoming US PCE data will show persistent inflation.

Andrew Brenner from NatAlliance Securities noted, "It’s all about the Fed — higher for longer is keeping rates high, drawing money into the US and strengthening the dollar. For Japan, this is a problem."

Tech and Bank News

Micron Technology’s shares slumped after projecting lower-than-expected sales, dragging down other chipmakers like Nvidia. However, the Federal Reserve announced that the largest US banks passed the annual stress test, clearing the way for higher shareholder payouts.

Market Breadth Concerns

The recent attempt to diversify beyond megacap tech stocks was short-lived. Measures show weak market breadth, raising doubts about the rally’s sustainability. David Bahnsen from The Bahnsen Group said, "The stock market is too reliant on big tech. Whether the recent volatility is the start of something deeper remains to be seen."

Bond Sales and Commodities

Asia Pacific companies and governments hit a nine-month high in dollar bond sales, aiming to secure tight spreads before they climb. India’s sovereign debt market is attracting global investors, highlighting the challenges of doing business in the country.

In commodities, gold steadied after a two-day decline, while West Texas Intermediate crude edged lower.

Key Events This Week

  • China industrial profits
  • Eurozone economic confidence
  • US durable goods, initial jobless claims, GDP
  • Nike earnings
  • Japan Tokyo CPI, unemployment, industrial production
  • US PCE inflation, spending, income, University of Michigan consumer sentiment
  • Fed’s Thomas Barkin speaks

Main Market Moves

Stocks:

  • S&P 500 futures fell 0.3%
  • Nikkei 225 futures fell 0.8%
  • Japan’s Topix fell 0.4%
  • Australia’s S&P/ASX 200 fell 1%
  • Hong Kong’s Hang Seng fell 1.8%
  • Shanghai Composite fell 0.7%
  • Euro Stoxx 50 futures fell 0.3%
  • Nasdaq 100 futures fell 0.4%

Currencies:

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0691
  • The Japanese yen rose 0.2% to 160.47 per dollar
  • The offshore yuan was little changed at 7.2956 per dollar
  • The Australian dollar was little changed at $0.6650

Cryptocurrencies:

  • Bitcoin was little changed at $60,951.35
  • Ether fell 0.2% to $3,382.55

Bonds:

  • The yield on 10-year Treasuries was little changed at 4.34%
  • Japan’s 10-year yield advanced 4.5 basis points to 1.075%
  • Australia’s 10-year yield advanced nine basis points to 4.40%

Commodities:

  • West Texas Intermediate crude fell 0.5% to $80.52 a barrel
  • Spot gold was little changed
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