Asian Stocks Fall With US Futures After Earnings: Markets Wrap

(Bloomberg) — Most Asian stocks declined following losses on Wall Street after an unimpressive start to the earnings reports from the “Magnificent Seven” megacap technology companies.

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Equity benchmarks in Japan, Hong Kong and mainland China all fell along with US stock futures. Earnings from some of corporate America’s largest businesses including Tesla Inc. and Alphabet Inc. were seen as insufficient to justify the recent rally in global equities. The yen gained for a third day before next week’s Bank of Japan meeting.

“The bar from investors after the runup we’ve seen in global equities year to date, investors are looking for opportunities to take some profit,” Eli Lee, chief investment strategist at Bank of Singapore Ltd., said on Bloomberg Television. “Though we think tech earnings are going to be fairly resilient over the next few weeks, we may see some volatility in equity markets.”

Alphabet retreated in US trading Tuesday after the company’s chief signaled patience will be needed to see concrete results from artificial-intelligence investments. Tesla slid as much as 7% after profit missed estimates and the electric-vehicle giant delayed its Robotaxi event to October. Most shares of Tesla suppliers and electric vehicle peers in Asia declined such as suppliers Panasonic Holdings Inc. in Japan and Ningo Joyson Electronic Corp. in China.

Taipei’s bourse is shut for a typhoon, meaning shares of tech giant Taiwan Semiconductor Manufacturing Co. are not trading.

The yen strengthened past 155 per dollar for the first time since early June as traders repositioned for the possibility the BOJ will raise interest rates in coming months if not at its policy meeting next week. Only about 30% of BOJ watchers predict the authorities will hike rates on July 31, but more than 90% say there is a risk of such a move, according to a Bloomberg survey.

The New Zealand dollar fell to the weakest level in nearly three months as lower bond yields in the nation deterred carry trade investors.

Most Chinese shares fell, extending recent losses amid economic troubles and geopolitical risks. Still, the outstanding balance of short trades on China’s stock exchanges fell to 27.9 billion yuan ($3.8 billion), the lowest in more than four years, on Monday, when China’s new measures to curb short-selling went into effect, China Securities Journal reported Wednesday.

The amount of redemptions from China’s stock-focused mutual funds was one of the largest since 2005 in the second quarter, with more than half of the best-performing products seeing net selling by existing investors, according to Changjiang Securities.

Typhoon Gaemi is approaching Taiwan with strong winds and heavy rain, compelling Taipei to suspend stock trading. The Philippines will also close its financial markets, schools and offices after the typhoon lashed Manila.

Upbeat earnings on Wall Street would be a much-needed driver for equities after a bumper first half of the year. The market is facing pressure heading into a seasonally weak period, with volatility likely to be heightened by the US presidential election. In addition to the woes for Big Tech, United Parcel Service Inc. suffered its worst plunge ever on a profit miss.

The five biggest US technology companies are facing tough comparisons with stellar earnings cycles of the past year. Profits for the group are projected to rise 29% in the second quarter from the same period a year earlier, data compiled by Bloomberg Intelligence show.

Treasuries were little changed in Asia as investors awaited US debt auctions Wednesday and manufacturing PMI data. Oil rose, snapping a run of losses, after an industry report indicated that US crude inventories fell for a fourth week. Gold held an advance before key US economic data this week, that is forecast to support the case for interest-rate cuts.

Key events this week:

Canada rate decision, Wednesday
US new home sales, S&P Global PMI, Wednesday
IBM, Deutsche Bank earnings, Wednesday
Germany IFO business climate, Thursday
US GDP, initial jobless claims, durable goods, Thursday
US personal income, PCE, consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.6% as of 1:33 p.m. Tokyo time
Nikkei 225 futures (OSE) fell 1%
Japan’s Topix fell 1.2%
Australia’s S&P/ASX 200 fell 0.3%
Hong Kong’s Hang Seng fell 0.6%
The Shanghai Composite was little changed
Euro Stoxx 50 futures fell 0.6%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0845
The Japanese yen rose 0.5% to 154.82 per dollar
The offshore yuan was little changed at 7.2869 per dollar

Cryptocurrencies

Bitcoin rose 0.2% to $65,995.26
Ether fell 1.2% to $3,443.05

Bonds

The yield on 10-year Treasuries was little changed at 4.25%
Japan’s 10-year yield advanced 1.5 basis points to 1.075%
Australia’s 10-year yield was little changed at 4.34%

Commodities

West Texas Intermediate crude rose 0.2% to $77.09 a barrel
Spot gold rose 0.2% to $2,415.45 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott, Paul Allen and Avril Hong.