Asian markets were mostly lower on Friday after a broadly negative lead from Wall Street, where tech giants led a sell-off on profit-taking, while traders watch for intervention as the yen retreats to three-decade lows.
A batch of worse-than-forecast U.S. data provided further signs that the world’s No. 1 economy is softening, but it wasn’t enough to help the S&P 500 and Nasdaq to more record highs.
The readings showed more people claiming jobless benefits than estimated, housing starts to fall and a core business confidence index for June well below May.
Meanwhile, Minneapolis Fed chief Neel Kashkari said it could take a year or two to bring inflation down to the central bank’s two percent target, echoing his colleagues’ warnings that they wanted to take time before cutting costs lending.
European stocks rise, AI pushes US into record territory
The economic data boosted hopes for a rate cut, but were overshadowed by losses in market titans including Nvidia, Apple and Microsoft, which have led the recent tech-fueled rally in US markets.
Nvidia’s 3.5% drop meant it relinquished its crown as the world’s most valuable publicly traded company to Microsoft, which it had overtaken earlier this week.
Asian traders followed the weak lead, with Hong Kong, Shanghai, Seoul, Wellington, Taipei and Manila falling. Singapore, Sydney and Jakarta rose while Tokyo was flat.
Attention is once again on the yen as it retreats to 34-year lows against the dollar, which led to suspected intervention by Japanese authorities in April.
Fading hopes that the Fed will cut rates more than once this year – if at all – have pushed the dollar higher against its bonds in recent weeks, with the yen taking a hit from the Bank of Japan’s refusal to tighten monetary policy more quickly.
Germany’s coalition is deadlocked over the 2025 budget
While the BoJ is expected to announce further easing measures at its next meeting, the wide spread in yields between the two central banks means investors are currently staying in US assets.
The yen barely moved on Friday, a day after weakening to around 159 per dollar from 157.80.
That led top currency official Masato Kanda to reiterate that the government was ready to act when necessary and that the moves were too quick — he said earlier in the year that a 10-yen move in either direction was considered excessive.
Authorities suspect they intervened when the Japanese unit fell above 160 to the dollar two months ago.
But analysts said the interventions had little long-term impact.
And Monex’s Helen Given added: “I am increasingly convinced that currency officials are abandoning gen.
“The yield gap is too wide to overcome right now, and with the U.S. now only looking at one cut this year, it’s not going to improve substantially anytime soon.”
Asian markets move as traders assess the outlook for interest rates
Keys around 02:30 GMT
Tokyo – Nikkei 225: FLAT at 38,626.95 (break)
Hong Kong – Hang Seng Index: DOWN 1.3 percent at 18,100.46
Shanghai Composite: DOWN 0.2 percent at 3,000.94
EUR/USD: UP at $1.0713 from $1.0705 on Wednesday
Euro/pound: UP to 84.61 pence from 84.56 pence
Dollar/yen: DOWN to ¥158.90 from ¥158.91
Pound/Dollar: UP to $1.2662 from $1.2657
West Texas Intermediate: DOWN 0.1% at $81.20 a barrel
North Sea Brent crude: UP 0.1% to $85.59 a barrel
New York – Dow: UP 0.8 percent at 39,134.76 (close)
London – FTSE 100: UP 0.8 per cent at 8,272.46 (close)
Source: AFP