(Bloomberg) — Most Asian stocks fell and traded in a narrow range on Wall Street after a weak start to earnings reports from the “Magnificent Seven” technology giants.
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Japan’s stock index fell slightly, while China’s index opened slightly higher. U.S. stocks fell on Tuesday as traders scrutinized the performance of some of the largest U.S. companies, including Tesla Inc. and Alphabet Inc., after they reported earnings. The Taipei stock exchange was closed due to the typhoon, and Taiwan Semiconductor Manufacturing Co. was not trading.
Investors had been banking on tech gains to sustain the bull market that has propelled U.S. and global stocks to record highs. But that didn’t materialize as Alphabet Inc.’s stocks tumbled after its CEO suggested patience was needed to see tangible results from its investments in artificial intelligence. Tesla Inc.’s shares fell as much as 7% after profits fell short of expectations and the electric car maker postponed its robotaxi event until October.
“Given the high earnings expectations of the Magnificent Seven, these companies will have a lot to prove,” said Anthony Sagrimbene at Ameriprise. “At the same time, their prospects will likely be heavily scrutinized relative to their inflated valuations.”
The Bloomberg Dollar Index hit its highest level in nearly two weeks before erasing gains.
The yen rose for a third straight day as traders prepared for the Bank of Japan’s policy meeting next week. Only about 30 percent of BOJ watchers expect the authority to raise interest rates on July 31, while more than 90 percent say there is a risk of such a move, according to a Bloomberg survey.
Investors are also focusing on China’s market, which has lost steam due to economic problems and geopolitical risks.Short interest on China’s stock exchanges fell to 27.9 billion yuan (3.8 billion yuan) on July 22, the day new Chinese measures to curb short selling took effect, the China Securities Journal reported on Wednesday, the lowest level in more than four years.
Typhoon Gami is approaching Taiwan bringing strong winds and heavy rains, forcing Taipei to suspend its $2.4 trillion stock market. Trading in securities, currencies and bonds will be halted on Wednesday, the bourse said. The Philippines will also close financial markets, schools and offices after the typhoon hit Manila.
The strong performance on Wall Street will provide a much-needed boost to stocks after a strong first half of the year. The market is under pressure amid a seasonally weak period and the possibility of increased volatility due to the U.S. presidential election. In addition to the woes of big technology companies, United Parcel Service (UPS) suffered its biggest sell-off on record after missing profits.
The Big Five U.S. technology companies are facing a tougher earnings cycle than last year’s stellar earnings cycle, with the group’s profits expected to rise 29% in the second quarter from a year earlier, according to data compiled by Bloomberg Intelligence.
The 10-year Treasury note was little changed as investors awaited the release of a bond auction and U.S. manufacturing PMI data on Wednesday. Crude oil fell on algorithmic selling and a summer liquidity slump. Gold held on to gains ahead of key U.S. economic data due this week that is expected to provide the basis for a rate cut.
Major events this week:
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Canada interest rate decision Wednesday
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U.S. New Home Sales, S&P Global PMI, Wednesday
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IBM, Deutsche Bank Earnings Wednesday
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German IFO Business Environment, Thursday
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US GDP, initial jobless claims, durable goods, Thursday
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US Personal Income, PCE, Consumer Sentiment Friday
Some of the key market developments:
stock
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S&P 500 futures were down 0.3% as of 10:47 a.m. Tokyo time.
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Nikkei 225 futures fell 0.2%
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Japan’s TOPIX falls 0.4%
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Australia’s S&P/ASX 200 down 0.1%
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Hong Kong’s Hang Seng Index fell 0.3%
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The Shanghai Composite Index was little changed
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Euro Stoxx 50 futures fell 0.4%
currency
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The Bloomberg Dollar Spot Index was little changed.
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The euro was little changed at $1.0848
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The Japanese yen rose 0.2% to 155.29 yen to the dollar.
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The offshore yuan was little changed at 7.2874 yuan per dollar.
Cryptocurrency
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Bitcoin fell 0.1% to $65,755.51.
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Ether fell 1% to $3,447.08.
Bonds
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The yield on the 10-year Treasury note was little changed at 4.25%.
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Japan’s 10-year government bond yield rose 1 basis point to 1.070%.
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Australia’s 10-year government bond yield rose 2 basis points to 4.36%.
merchandise
This story was produced with assistance from Bloomberg Automation.
–With assistance from Jason Scott.
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