Morning Bid: Big Tech tanks, yen slide accelerates

10/23/2024

2 minutes read

2024.10.23 18:14

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

Asian markets are likely to open on the defensive on Thursday with sentiment badly dented by the continued rise in U.S. bond yields and mounting speculation the Federal Reserve won’t cut U.S. interest rates as much as investors had previously hoped.

That shifting outlook sparked a sharp selloff in U.S. Big Tech stocks on Wednesday and the Nasdaq fell 1.6%, its biggest fall in nearly two months. World stocks, meanwhile, fell for a third straight day.

That’s a bearish backdrop to Asian trading on Thursday, although the 8% surge in Tesla (NASDAQ:) shares after the close on Wednesday following the company’s third-quarter results may offer the tech sector some support.

There’s a raft of top-tier local economic data due from Asia on Thursday, including purchasing managers index reports from Japan, India and Australia, third quarter GDP from South Korea, and inflation figures from Malaysia.

In currency markets the spotlight remains fixed on dollar/yen. It rose above 152.00 on Wednesday, breaking technical resistance at the 200-day moving average in the process, which suggests the upward momentum has more room to run.

This is fueling market chatter about possible intervention from Japanese authorities to slow the move.

But with many top finance officials, including Bank of Japan Governor Kazuo Ueda, in Washington for the IMF and World Bank annual meetings and Japan’s general election only days away, intervention at this juncture may be a long shot.

“I doubt they will do anything unless we were to fly through 160.00 for some reason,” reckons Brad Bechtel at Jefferies.

Ministry of Finance officials were warning against what they described as speculative moves when the yen fell below 149 per dollar nearly three weeks ago. Japan last conducted yen-buying intervention in late July after the currency tumbled to a 38-year low below 161 per dollar.

Ueda said in Washington on Wednesday it was “still taking time” for Japan to achieve its 2% inflation goal in a sustainable manner, adding that it is “very hard” to pin down the appropriate size of interest rate hikes from here on.

Inflation figures for the capital Tokyo on Friday will give the latest steer on Japanese price pressures. A Reuters poll suggests consumer inflation in Tokyo in September was 1.7%, undershooting the BOJ’s 2% price target for the first time in five months.

Elsewhere in Asian currencies, South Korea’s finance minister was reported on Wednesday as saying the won’s current level near 1,400 per dollar should be regarded as a “new normal”.

Figures on Thursday are expected to show that the South Korean economy bounced back to growth in the third quarter after shrinking 0.2% in the second.

Here are key developments that could provide more direction to markets on Thursday:

– Japan, India, Australia PMIs (October)