Asian stock markets fell after a disappointing outlook from Meta Platforms Inc raised concerns about whether the technology sector that has powered the bull market has passed its peak.
Stocks in Hong Kong, Japan and mainland China fell, while U.S. equity futures showed signs of a pullback. Australian financial markets were closed for a holiday. The yen extended its slide after falling above 155 to the dollar for the first time in more than three decades on Wednesday, raising the chances of intervention before the Bank of Japan’s policy meeting on Friday.
A $250 billion exchange-traded fund tracking the Nasdaq 100 index took a hit after U.S. trading hours, as Facebook’s parent company fell more than 15%. Meta forecast second-quarter sales to fall short of analysts’ expectations and raised its spending estimates for the year.
Meta's pessimistic outlook
“The largely pessimistic outlook for Meta has sent markets looking for cover after hours, which has also led to caution as Asian markets begin trading, already reeling from the Fed’s (higher-for-longer) rate hike and China tensions,” said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank in Singapore.
In Japan, the yen fell to 155.42 yen per dollar on Thursday, its lowest level in 34 years against the greenback. Traders will be on alert for any comments from officials suggesting a greater readiness to intervene ahead of the Bank of Japan’s monetary policy decision.
The Bank of Japan is expected to keep its current interest rate unchanged on Friday, while a weaker currency could make it less likely to stick to its easy policy stance.
Japan Airlines Co. Chief Executive Officer Mitsuko Totori said in a group interview that the weak Japanese currency is a big problem, adding that raising interest rates would be better after the currency reaches about 155 yen to the dollar.
A major deal in the mining world
In the corporate world, shares of South Korea’s SK Hynix Inc. fell even as it said it expects a full recovery in the memory chip market after demand for artificial intelligence spurred the company to post its fastest pace of revenue expansion since at least 2010.
Hynix shares were sold off on Wednesday's strong earnings, while Meta's 15% drop also dampened investor sentiment, said Marcelo Seungsoo Ahn, portfolio manager at Quad Investment Management Co. in Seoul.
BHP Group Ltd has approached Anglo American Plc about buying the 107-year-old company, in a move that would trigger the biggest shake-up in the global mining industry in more than a decade.
Elsewhere, oil was modestly lower as risk aversion in broader markets took hold in the face of a drawdown in U.S. inventories. Gold was little changed. Treasury bonds opened little changed in Asia after yields rose yesterday.
Meta reported revenue of $36.5 billion in the first quarter, up more than 27% from the same period last year. That was a slight win, as analysts had expected revenue of $36.1 billion on average, according to estimates compiled by Bloomberg. Profit more than doubled to $12.4 billion.
US interest rate position
For weeks, traders have pared back the number of interest rate cuts they expect from the Federal Reserve amid a string of resilient economic data. Economists surveyed by Bloomberg expect gross domestic product to grow at around 2.5% in the first quarter, though the numbers still point to persistent inflation pressures.
“The upcoming GDP report comes as market participants are hoping for a weak number that would lead to a rate cut sooner rather than later,” said Jose Torres of Interactive Brokers. “But we expect a stronger-than-expected number. That would be good for earnings growth prospects, but bad for the timing and magnitude of rate cuts.”
