Asian stocks fell after U.S. technology shares fell at the end of trading, while the yen steadied after yesterday's decline that sparked fresh speculation that officials would intervene to support the currency.
Stocks in Japan, Australia and China fell, putting MSCI’s broadest index of Asia-Pacific shares on track for its first loss in three sessions. U.S. stock futures fell after big tech companies were hurt by Micron Technology Inc.’s earnings, which fell short of expectations for an industry that has fueled a bullish stock market.
The yen rose marginally on Thursday after falling 0.7 percent in the previous session when it fell to 160.87 against the dollar, its weakest since 1986 and above the level where officials intervened in April. The currency has lost more than 12 percent against the dollar this year.
Emerging Market Currencies
An index of emerging market currencies fell to a two-month low and a gauge of Asian currencies fell to levels not seen since 2022 as traders flocked to the haven of the dollar. Treasuries extended their recent declines, even after yesterday’s $70 billion five-year bond auction showed signs of healthy demand.
“It’s all about the Fed — if they keep raising rates for longer, short-term yields are going to be very high, which attracts money to the U.S. and keeps the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities LLC. “That’s a problem for Japan.”
Chipmakers retreat
Micron shares fell after the computer memory chip maker forecast sales that fell short of some investors’ estimates. The news sent shares of chipmakers, including giant Nvidia, tumbling.
Also after Wall Street closed, the Federal Reserve said the largest U.S. banks had passed their annual stress test, paving the way for higher shareholder payouts.
The market’s recent attempt to rally without relying on a group of big stocks was short-lived, and a gauge of how much the market relies on a group of stocks to fuel its moves is pointing to weakness, adding to uncertainty about whether the rally will continue. The divergence between the S&P 500’s performance and a gauge of how much the market relies on a group of stocks to fuel its moves has reached one of its worst levels in three decades, according to Bloomberg Intelligence.
Relying on technology stocks
“Ultimately, the market is still heavily dependent on big tech stocks,” said David Bahnsen of Bahnsen Group. “Excessive investor sentiment, euphoria and over-the-top momentum always end the same way, whether or not the volatility in tech stocks last week is the beginning of something deeper, or whether or not this slide will continue.”
Elsewhere in Asia, South Korea priced its first dollar bonds since October 2021 on Wednesday. The country sold $1 billion in five-year notes, according to a person familiar with the matter. The deal extends a recent surge in dollar bond issuance in Asia, with last week seeing the busiest selling period since January 2023.
In commodities, gold mostly held onto its decline from Wednesday, falling to its lowest level in about three weeks. West Texas Intermediate crude fell.
