(Bloomberg) – An index of Asian equities was on track to end a three-day losing streak led by the technology sector, while U.S. stock futures fell after stocks powered by artificial intelligence rallied sharply in the previous session.
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Benchmark indices rose in Japan, South Korea, India and Australia, and mainland China benchmark indices reversed previous declines. The Hong Kong market was closed on Friday for a public holiday. European futures gained 0.1%.
It was the second day of gains for chip stocks in the region after an upbeat sales forecast from Nvidia Corp late Wednesday. triggered a rapid interest in AI. Notable developments in Asia include Japan’s Screen Holdings Co. up as much as 9%, South Korea’s SK Hynix Inc. up 6.8% and Taiwan Semiconductor Manufacturing Co. up 4.6%.
The AI rally continued in the US after hours, as Marvell Technology Inc. forecast that revenue from the technology will at least double in 2024 year-on-year. Previously, shares of Nvidia were up 24%, taking the company to the cusp of a $1 trillion market value.
An indicator of dollar strength fell as investors continued to analyze signals from US debt ceiling talks as time to avert a default grew ever scarcer. Republican and White House negotiators were said to be nearing an agreement to raise the debt limit and cap federal spending for two years.
Government bond yields fell marginally in Asian trading after rising sharply on Thursday. Australian and New Zealand government bond yields rose in their wake.
Treasury bond yields, which are due to mature early next month, were below recent highs but still showed that investors are demanding a premium for securities that face the greatest risk of not being repaid when the government stretches its borrowing capacity exhausted.
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The yen edged up against the greenback but stayed near the 140 level. The Japanese currency has weakened on bets that the Federal Reserve will hike interest rates in the next two policy meetings, while its Tokyo counterpart remains ultra-loose.
Data on Friday pointed to a slowdown in inflation in Tokyo, supporting expectations of ongoing divergence between the Bank of Japan and the Fed. This keeps the yen in check and in turn helps Japanese stocks.
“The weak yen is generally a tailwind for Japan, but over time, unless the BOJ remains inactive, we should probably expect the yen to strengthen,” said Kieran Calder, Union’s head of equity research for Asia Bancaire Privée in Singapore on Bloomberg Television. “The sweet spot for the yen is closer to around 125 than it is now.”
Read more: US on ‘borrowed time’ as debt ceiling drives liquidity below $50 billion
Debt ceiling dispute in Washington raises risks assessed by Fed officials as they consider suspending rate hikes. On Thursday, amid mixed data including higher revised first-quarter GDP and lower-than-expected jobless claims, there were bets for another quarter-point hike within the next two policy sessions.
“The market is so fixated on the next direction in interest rates instead of focusing on how close we are to the top of the interest rate cycle,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, told Bloomberg Television. “In six months we’re really going to look at the possibility of rate cuts.”
Elsewhere, oil prices held steady after falling more than 3% on Thursday as Russia indicated OPEC+ is unlikely to change production levels at its next meeting.
Both copper and iron ore broke key levels this week, dragging the Bloomberg Commodity Index lower.
Important events this week:
US Consumer Income, Wholesale Inventories, Durable Staples, University of Michigan Consumer Sentiment, Friday
Some of the key movements in the markets:
S&P 500 futures were down 0.1% as of 6:50 a.m. London time. The S&P 500 rose 0.9%
Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 2.5%
Japan’s Topix index rose 0.1%
China’s Shanghai Composite Index up 0.4%
Australia’s S&P/ASX 200 index rose 0.2%
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.1% to $1.0740
The Japanese yen rose 0.2% to 139.76 per dollar
The offshore yuan rose 0.3% to 7.0712 per dollar
The Australian dollar rose 0.2% to $0.6515
The British pound rose 0.1% to $1.2338
Bitcoin fell 0.4% to $26,371.99
Ether fell 0.3% to $1,804.17
The 10-year government bond yield fell two basis points to 3.80%
Japan’s 10-year yield was little changed at 0.420%
Australia’s 10-year yield rose three basis points to 3.73%
West Texas Intermediate crude was little changed
Spot gold rose 0.4% to $1,949.37 an ounce
This story was created with the support of Bloomberg Automation.
– With support from Isabelle Lee and Rob Verdonck.
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