Asian stocks mixed on tech losses, yen swings: Markets fall

(Bloomberg) — Asian stocks posted mixed results as investors weighed rising expectations for interest rate cuts from the Federal Reserve against continued weakness in technology stocks.

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Stocks in Australia, Japan and South Korea rose along with U.S. stock futures on Friday. Chinese stocks in Hong Kong and on the mainland fluctuated, and the yen weakened against the dollar ahead of next week’s Bank of Japan meeting.

Taiwanese shares were the worst performers, falling as much as 4.3% as trading resumed following disruptions caused by Typhoon Gaemi. The declines marked a recovery from previous technology-related declines in global stocks and included a sharp drop for Taiwan Semiconductor Manufacturing Co., which fell as much as 6.5%.

The U.S. 10-year bond yield was little changed in Asian trading after falling four basis points on Thursday as Treasury bonds rose. The gains for U.S. government debt came as investors weighed signs of a resilient U.S. economy against calls for faster rate cuts from the Federal Reserve. The swaps market is currently pricing in the first rate cut in September.

Asian shares are set for their first consecutive weekly losses since May as a global rotation away from technology stocks – especially those benefiting from the AI ​​boom – and towards the year’s laggards accelerated this week.

“We are not yet announcing a peak in Asian AI, but we appear to be getting closer,” strategists at HSBC Holdings Plc, including Herald van der Linde, wrote in a note. The dynamics are changing rapidly and “we are now even more convinced that the sector deserves a lot of attention”.

China’s benchmark government bond yield fell to a new all-time low as the bond rally dragged on, testing policymakers’ resolve to halt the change. Meanwhile, the CSI 300 index is expected to have its worst week since the beginning of February, as investors seek safe haven assets amid a shaky economic recovery.

“Policy incentives appear to be ineffective for market sentiment until they translate into increased profits,” said Marvin Chen of Bloomberg Intelligence. “From that perspective, the upcoming earnings season in August could be a catalyst, but expectations are not high.”

The yen traded below 154 per dollar in erratic trading and remained off the previous session’s intraday highs. Inflation in Tokyo accelerated for a third month in July, reinforcing bets of a possible interest rate hike when the central bank’s policy council meets next week.

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“To get below 150 convincingly, we need the Fed to actually deliver, or see a lot more in the form of foreign bond sales by institutional Japan,” Tim Baker, Head of Macro Research at Deutsche Bank AG, said on Bloomberg Television.

The yen’s recovery remains fragile, with only 30% of BOJ observers surveyed by Bloomberg predicting a rise, even though more than 90% see it as a risk.

A cut to 155.30 per dollar is “not out of the question” ahead of the Bank of Japan meeting, said Tony Sycamore, an analyst at IG Australia Pty.

Growth accelerates

In the US, the S&P 500 fell 0.5% on Thursday, while the Nasdaq 100 fell 1.1%, as technology giants including Nvidia Corp. fell. Small caps outperformed, another sign that investors are preparing for interest rate cuts that will support the broader economy.

Economic growth accelerated more than expected in the second quarter, illustrating that demand is holding up under the weight of higher debt rates. Gross domestic product increased at an annualized rate of 2.8%, after increasing 1.4% in the previous quarter. A closely watched measure of underlying inflation rose 2.9%, down from the first quarter but still above estimates.

“As long as the economy avoids a recession, this bull market will continue through 2024 and into 2025, so we would take advantage of any pullbacks along the way,” said Chris Zaccarelli of Independent Advisor Alliance.

In commodities, West Texas Intermediate extended gains for a third day on Friday. Gold rose further.

Some of the main movements in the markets:

Actions

• S&P 500 futures were up 0.4% at 1:08 p.m. Tokyo time

• Nasdaq 100 futures rose 0.5%

• Japan’s Topix rose 0.4%

• Australia’s S&P/ASX 200 rose 0.9%

• Hong Kong’s Hang Seng rose 0.2%

• The Shanghai Composite fell 0.2%

• Euro Stoxx 50 futures rose 0.1%

Coins

• The Bloomberg Dollar Spot index was little changed

• The euro rose 0.1% to $1.0859

• The Japanese yen rose 0.1% to 153.76 per dollar

• The offshore yuan fell 0.2% to 7.2526 per dollar

Cryptocurrencies

• Bitcoin rose 2.8% to $67,072.05

• Ether rose 2.7% to $3,239.4

Titles

goods

• West Texas Intermediate crude rose 0.2% to $78.44 a barrel

• Spot gold rose 0.3% to $2,372.63 an ounce

This story was produced with help from Bloomberg Automation.

–With assistance from John Cheng and Zhu Lin.

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