Written by Uncle Banerjee
SINGAPORE (Reuters) – Asian stocks fell on Thursday as disappointing earnings forecasts for Facebook parent Meta Platforms hurt tech stocks, while the yen rose above 155 to the dollar for the first time since 1990. The decline has heightened concerns about intervention by the Japanese government.
Meta shares plunged 15% in after-hours trading after parent company Instagram predicted lower-than-expected revenue and higher expenses for the current quarter, sparking a sell-off in U.S. tech and tech-related stocks and creating a sour mood. became.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.7%, with a predictable hit to Asian tech stocks.
Japan’s Nikkei Stock Average fell 1.3%, Chinese stocks also fell, the blue-chip CSI300 index fell 0.3% and Hong Kong’s Hang Seng Index fell 0.5%.
Tech leaders are in the spotlight during a busy earnings week, with Alphabet, Microsoft and Intel scheduled to report later Thursday.
“If the meta is any guide, the market simply doesn’t seem to tolerate inline. Even if you get through Q1 and Q2 well, you either blow the lights out or the market takes the meat. raft,” Chris Weston said. , head of research at Pepperstone.
Tech stocks rose on Wednesday after Tesla announced it would introduce a “new model” by early 2025 using its current platform and production lines.
Beyond corporate earnings, investors will be focused on first-quarter U.S. gross domestic product (GDP) data on Thursday and March consumer spending, the Fed’s preferred inflation measure, on Friday. right.
According to the CME FedWatch tool, the better-than-expected consumer price inflation report in March has pushed back expectations for when the Fed will start cutting interest rates, with the market now pricing in a 70% chance of a September rate cut. It has been shown.
Traders are pricing in 43 basis points (bp) of easing in 2024, well below the 150 basis points (bp) expected earlier this year.
Changes in U.S. interest rate expectations have pushed up U.S. bond yields and the dollar, casting a shadow on the currency market. Against a basket of currencies, the dollar was little changed at 105.75. The index is up more than 4% this year.
The yen, which is sensitive to U.S. bond yields, has taken the brunt of the dollar’s rise and has fallen 9% this year, the worst performer among the G10 currencies.
On Thursday, the yen hit a 34-year low of 155.45 yen in early trading, trading at 155.445 yen to the dollar, breaking above the key 155 yen level that some traders had marked as a red line for Tokyo. did. action.
The Bank of Japan (BOJ) began a two-day rate-setting meeting on Thursday to discuss monetary policy, raising expectations that the central bank will keep its short-term interest rate target unchanged.
But all eyes will be on comments from Bank of Japan Governor Kazuo Ueda, who seeks to maintain a calibrated path out of ultra-easy interest rates without upending the currency.
The BOJ chief will be careful to avoid the episode in 2022, when his predecessor’s dovish comments caused the yen to plummet, forcing the Japanese government to intervene by spending an estimated $60 billion to defend the yen.
Kieran Williams, head of Asian FX at InTouch Capital Markets, said the dollar/yen pair appeared to be trading broadly in line with the relative interest rate spread, suggesting the Treasury would contend with strong headwinds. He said he is doing so.
“If USD/JPY continues to appreciate after the BOJ’s policy, officials may choose to take action, especially after Finance Minister Suzuki hinted that the environment was ripe for intervention.”
Japan’s ruling party has not yet actively debated the level of the yen that warrants market intervention, but party executives believe that a decline in the exchange rate toward 160 yen to the dollar could prompt policymakers to take action. Takao Ochi told Reuters.
In commodity markets, oil prices fell slightly as concerns about a potential slowdown in the US economy outweighed concerns about the risk of escalating conflict in the Middle East.
On the day, U.S. crude oil fell 0.08% to $82.74 per barrel, and Brent crude oil fell 0.03% to $87.99. Spot gold rose 0.2% to $2,320.32 an ounce. [O/R] [GOL/]
(Edited by Sri Navaratnam)
