Asian markets mixed as global rally stalls, eyes on yen

Hong Kong – Asian equities were mixed Thursday as investors turned cautious after the past three days’ sizeable gains, with Meta’s warning that it will spend far more than expected this year fuelling worries that the latest tech-led rally may have gone too far.

Traders also kept an eye on Japan as the yen wallowed at a fresh three-decade low above 155 per dollar, a level many observers saw as likely to see authorities intervene in currency markets.

They were also preparing for the release of key US inflation data Friday that could have a bearing on the Federal Reserve’s plans for cutting interest rates ahead of its meeting next week.

Stocks have enjoyed broad gains this week on optimism that earnings from some of the world’s biggest companies — particularly in the tech sector — would show that profits remained strong even amid stubbornly high inflation and elevated interest rates.

The latest advances saw London chalk up 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 down, S&P flat and Nasdaq slightly higher.

And Asia followed suit, with analysts suggesting Facebook parent Meta could be a key reason after it said expenditures would exceed expectations this year as it projected second-quarter sales that were below analyst expectations and increased its spending estimates.

Because of investments in artificial intelligence, it saw 2024 capital expenditure of $35-$40 billion, up from a prior range of $30-$37 billion. Its shares tanked more than 10 percent in after-hours US trading.

Tokyo, Singapore, Seoul, Taipei and Jakarta all fell, though Hong Kong resumed its latest rally, while Shanghai and Manila were also up.

“Meta’s resources are vast, but not infinite,” Sophie Lund-Yates, at Hargreaves Lansdown, said.

“The language around spending plans has become bolder once more, and this could be what’s spooking markets.”

Tech titans Microsoft and Alphabet are due to report later in the day.

Then focus turns to the macro-economy, with the release Friday of the personal consumption expenditures (PCE) index — the Fed’s favoured gauge of inflation.

There are fears that inflation could spike again after three straight months of above-forecast consumer price index figures that — along with warnings from monetary policymakers — dented expectations for how many cuts the bank will make this year.

The PCE reading comes ahead of the Fed’s meeting next week.

“Since the start of this year, we have held the view that the (policy board) will embark on a series of gradual, 25 basis-point-per-quarter rate cuts, commencing in June” and going through to the third quarter of 2025, said HSBC’s Ryan Wang.

“While we retain 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 keeping a close eye on currency markets after the yen fell to a 34-year low of 155.45 to the dollar, fuelling speculation of an intervention to support the currency.

Officials have in recent weeks said they are prepared to step in owing to excessive moves they blamed on speculators.

However, commentators warn that an intervention will only be a temporary solution owing to the fact that US interest rates remain at two-decade highs and the Bank of Japan remains wedded to its loose monetary policy. 

The bank holds its next meeting Friday.

– Key figures around 0230 GMT – 

Tokyo – Nikkei 225: DOWN 1.7 percent at 37,818.11 (break)

Hong Kong – Hang Seng Index: UP 0.9 percent at 17,361.42

Shanghai – Composite: UP 0.2 percent at 3,049.85

Dollar/yen: UP at 155.44 yen from 155.31 yen on Wednesday

Euro/dollar: UP at $1.0706 from $1.0701

Pound/dollar: UP at $1.2465 from $1.2461

Euro/pound: UP at 85.88 pence from 85.85 pence

West Texas Intermediate: UP 0.1 percent at $82.85 per barrel 

Brent North Sea Crude: UP 0.1 percent at $88.09 per 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)