Asian Equities Fall; Yen Trims Losses After Slide: Markets Wrap

(Bloomberg) — Asian shares declined after the largest US tech companies dropped in late US trading. The yen stabilized following a Wednesday slide that triggered fresh speculation officials will step in to support the currency.

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Stocks in Japan, Hong Kong, South Korea and China all declined, putting the MSCI Asia Pacific gauge on course for its first loss in three days. US equity futures slipped after big tech was hit by Micron Technology Inc.’s outlook that failed to meet the lofty expectations for the industry that has powered the bull market in stocks.

The yen gained as much as 0.3% after sliding 0.7% on Wednesday when it touched 160.87 per dollar, the weakest since 1986 and well past the level where officials intervened in April. The currency has lost about 12% against the greenback this year.

An emerging-market currency gauge dropped to near its lowest in two months and a gauge of Asian currencies fell to levels last seen in 2022 as the dollar strengthened. Treasuries extended their recent declines on concern Friday’s US PCE data will show inflation remains elevated.

“It’s all about the Fed — higher for longer is keeping the front end of rates very high, drawing money into the US and keeping the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities LLC. For Japan, “it’s a problem,” he said.

Micron Technology shares slumped after the maker of computer memory chips projected sales that trailed the estimates of some investors. The news dragged down some chipmakers including giant Nvidia Corp.

Also after Wall Street’s close, the Federal Reserve said the biggest US banks passed the annual stress test, paving the way for higher shareholder payouts.

The recent market attempt to broaden out of the megacap group was short-lived, with a bevy of measures still showing how market breadth remains weak — boosting uncertainty about the rally’s staying power. Bifurcation between S&P 500 performance and breadth has reached one of the worst levels in three decades, according to Bloomberg Intelligence.

“The stock market is way too reliant on big tech — period and end of story,” said David Bahnsen at The Bahnsen Group. “Whether or not the past week’s volatility in tech is the start of something deeper or if that reckoning is still forthcoming remains to be seen, but excessive investor sentiment, euphoria and overdone momentum always ends the same.”

Elsewhere, Asia Pacific companies and governments’ sales of dollar bonds in the primary market hit a nine-month high this week, as issuers look to lock in historically tight spreads before they climb further. The Korean government and other issuers sold more than $5.5 billion of notes on Wednesday, pushing the week’s tally close to $14 billion, according to data compiled by Bloomberg.

In commodities, gold steadied after a two-day decline, while oil traded in a narrow range ahead of the next round of US economic data.

Key events this week:

China industrial profits, Thursday
Eurozone economic confidence, consumer confidence, Thursday
US durable goods, initial jobless claims, GDP, Thursday
Nike releases earnings, Thursday
Japan Tokyo CPI, unemployment, industrial production, Friday
US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
Fed’s Thomas Barkin speaks, Friday