Asian shares were mixed on Thursday as investors were cautious after big gains over the past three days, with Meta warning that it will spend much more than expected this year, fueling concerns that the latest tech rally may have gone too far away.
Traders were also watching Japan as the yen fell to a new three-decade low above 155 to the dollar, a level many observers thought would likely see authorities intervene in currency markets.
They were also preparing for the release of key US inflation data on Friday, which could have an impact on the Federal Reserve’s plans to cut interest rates ahead of its meeting next week.
Stocks posted big gains this week on optimism that earnings from some of the world’s biggest companies — particularly in technology — would show that earnings remained strong even amid stubbornly high inflation and high interest rates.
Meta sees earnings jump in first quarter
The latest developments have seen London set a new record, joining Frankfurt, Paris, Tokyo and Wall Street this year.
However, they lost a little momentum in New York on Wednesday — with the Dow falling, the S&P flat and the Nasdaq slightly higher.
And Asia followed suit, with analysts suggesting Facebook parent Meta could be a key reason, after it said spending would beat expectations this year as it forecast second-quarter sales that were below analyst expectations and raised its spending estimates.
Due to AI investments, it saw 2024 capital spending of $35-40 billion, up from a previous range of $30-37 billion. Its shares rose more than 10 percent in after-hours trading in the US.
Tokyo, Singapore, Seoul, Taipei and Jakarta all fell, although Hong Kong repeated its recent rally, while Shanghai and Manila were also up.
The German forecast will offer signs if the struggling economy is on the mend
“Meta’s resources are vast, but not infinite,” said Sophie Lund-Yates, at Hargreaves Lansdown.
“The language around the spending plans has become bolder once again and that may be spooking markets.”
Tech titans Microsoft and Alphabet are set to announce later in the day.
The focus then turns to the macro economy, with Friday’s release of the personal consumption expenditures (PCE) index — the Fed’s favored gauge of inflation.
There are fears that inflation could soar again after three straight months of consumer price index data that – along with warnings from monetary policymakers – lowered expectations of how much the bank will cut this year.
The PCE reading comes ahead of the Fed meeting next week.
“Since the beginning of this year, we have been of the view that the (policy council) will begin a series of gradual rate cuts of 25 basis points per quarter, starting in June” and going through the third quarter of 2025, Ryan said HSBC’s Wang.
Asian shares rise on earnings optimism as US data approaches
“While we maintain this view, the risks are clearly skewed to a later start for rate cuts given Powell’s assessment of recent economic activity and core inflation data,” he said, referring to the US Fed chief.
In Japan, Finance Minister Shunichi Suzuki said he was closely monitoring currency markets after the yen fell to a 34-year low of 155.45 per dollar, fueling speculation of intervention to support the currency.
Officials have said in recent weeks they are ready to step in because of excessive moves they have blamed on speculators.
But commentators warn that an intervention will only be a temporary fix, given that US interest rates remain at two-decade highs and the Bank of Japan remains committed to its loose monetary policy.
The bank holds its next meeting on Friday.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 1.7 percent at 37,818.11 (break)
The London stock market is at a record high
Hong Kong – Hang Seng Index: UP 0.9 percent at 17,361.42
Shanghai – Composite: UP 0.2 percent to 3,049.85
Dollar/yen: UP to 155.44 yen from 155.31 yen on Wednesday
EUR/USD: UP at $1.0706 from $1.0701
GBP/USD: UP at $1.2465 from $1.2461
Euro/pound: UP to 85.88 pence from 85.85 pence
West Texas Intermediate: UP 0.1% to $82.85 a barrel
North Sea Brent crude: UP 0.1 percent at $88.09 a barrel
New York – Dow: DOWN 0.1 percent at 38,460.92 (close)
London – FTSE 100: Down 0.1 percent at 8,040.38 (close)
Source: AFP