Asian stocks experienced a decline following Meta Platforms Inc.’s disappointing outlook, sparking concerns about the sustainability of the tech-driven bull market in equities.
In Japan and South Korea, equity benchmarks dropped, while futures for Hong Kong also saw a decline. Australian financial markets were closed for a holiday. The yen traded within a narrow range after weakening beyond 155 per dollar for the first time in over three decades, increasing the likelihood of intervention.
A $250 billion exchange-traded fund tracking the Nasdaq 100 took a hit after regular US trading hours as Meta, the parent company of Facebook, plummeted over 15%. Meta’s second-quarter sales projections fell below analyst expectations, and the company revised its spending estimates for the year.
Sophie Lund-Yates, an analyst at Hargreaves Lansdown Plc, noted, “Meta’s resources are vast, but not infinite. The language around spending plans has become bolder once more, and this could be what’s spooking markets.”
In anticipation of economic data shaping views on the Federal Reserve’s next moves, the S&P 500 struggled near 5,070. Treasury yields opened relatively unchanged in Asia after rising on the previous day.
In Japan, the yen reached as low as 155.37 per dollar, prompting attention to any official comments from Tokyo indicating readiness for intervention.
SK Hynix Inc. of South Korea expressed optimism about a full recovery in the memory market following increased demand driven by AI, resulting in the chipmaker’s fastest pace of revenue expansion since at least 2010.
Elsewhere, oil experienced a modest decline, counteracted by a risk-off sentiment in broader markets despite a decrease in US stockpiles, while gold saw minimal movement.
Facebook parent Meta reported first-quarter revenue of $36.5 billion, surpassing analyst expectations. Tejas Dessai of Global X ETFs highlighted the company’s fundamental strength, while Mark Hackett of Nationwide suggested a potential decrease in the advantage of tech megacaps in the market.
Traders have been adjusting their expectations for Fed rate cuts amid resilient economic data, with hopes for a softer GDP report potentially impacting rate cut timing.
Key events for the week include US GDP data, earnings reports from companies like Microsoft and Alphabet, Japan’s rate decision, and US personal income and spending figures.
Here are some notable market movements:
Stocks:
- S&P 500 futures down 0.6% as of 9:09 a.m. Tokyo time
- Hang Seng futures down 0.4%
- S&P/ASX 200 futures down 0.8%
- Japan’s Topix down 0.8%
- Euro Stoxx 50 futures down 0.5%
Currencies:
- The Bloomberg Dollar Spot Index relatively unchanged
- The euro stable at $1.0704
- The Japanese yen stable at 155.26 per dollar
- The offshore yuan steady at 7.2711 per dollar
Cryptocurrencies:
- Bitcoin up 0.4% to $64,329.07
- Ether up 0.5% to $3,144.18
Bonds:
- Yield on 10-year Treasuries relatively unchanged at 4.64%
- Australia’s 10-year yield up 14 basis points to 4.41%
Commodities:
- West Texas Intermediate crude relatively unchanged
- Spot gold stable
This story was produced with the assistance of Bloomberg Automation, with contributions from Rita Nazareth.
