(Bloomberg) — Asian stocks fell on Friday as optimism over a Chinese bailout waned and investors weighed Intel’s weak results.
Most Read Articles on Bloomberg
Stocks in mainland China and Hong Kong fell after their biggest three-day rally since 2022. Morgan Stanley lowered its target price for China’s main stock index, saying China’s challenges such as debt, demographics and deflation were obstacles to further stock market gains.
The selling in Hong Kong stocks extended into the afternoon, with companies such as Wuxi Biologics Cayman and Wuxi Apptec leading the losses. Traders were referring to proposed legislation by some U.S. lawmakers aimed at banning Chinese medical technology company Wuxi AppTec and its divisions due to their ties to the Chinese Communist Party. Wuxi AppTec fell by a record 32%, while WuXi Biologics fell by up to 28%.
“Investors expect U.S.-China geopolitics to intensify as the U.S. approaches elections this November,” said Shi King Chong, portfolio manager at Kamet Capital Partners. “We expect more from both parties, especially the Republican Party,” he said, as former President Donald Trump’s 2024 election manifesto makes key points on Sino-American trade.
Commerce Minister Wang Wentao said at a press conference on Friday that China is facing a more complex and tough external trade environment this year.
“China’s drug risks – economic, financial and monetary – are certainly priced in,” Vishnu Varasan, Mizuho’s chief economist for Asia (excluding Japan), said in an email Friday.
MSCI’s Asia-Pacific index fell 0.8%, and Japan’s index also fell. U.S. stock futures fell after Intel gave a disappointing outlook. European futures markets were steady, but Korean stocks rose.
Tokyo’s inflation rate fell below 2% for the first time in more than a year and a half, slowing significantly more than expected. The Bank of Japan’s latest minutes, released on Friday, showed board members considering the strength of price increases and the timing of widely expected interest rate hikes.
Taro Kimura, an economist at Bloomberg Intelligence, said in a report that the inflation data “will likely cause the Bank of Japan to reconsider ending negative interest rates early.”
Markets in Australia and India are closed for public holidays.
U.S. inventories, China’s economic stimulus plan and attacks on Russian refineries sparked a flurry of trend-following algorithmic buying, sending oil prices to their highest level in nearly two months. Global credit spreads also fell to their tightest levels in two years as buyers rushed to take advantage of rising yields ahead of possible rate cuts this year by some major central banks.
Wall Street traders pushed stocks to new all-time highs with a sixth straight day of gains as the economy continues to recover. The latest U.S. gross domestic product (GDP) data overturns predictions of a recession and strengthens the outlook for U.S. businesses. The closely watched measure of underlying inflation is in line with the Federal Reserve’s 2% target, which many see as an encouraging sign.
“These numbers are definitely encouraging as we look ahead to a soft landing this year,” Alex Wolff, head of Asia investment strategy at JPMorgan Private Bank, said in an interview on Bloomberg TV. He added: “The positive earnings growth we’re expecting, especially across the board, could push the stock a little higher.”
The S&P 500 index closed near 4,900 and the yield on the US 10-year Treasury note fell. Swap contracts continue to fully factor in May’s Fed rate cut, pushing expectations for total rate cuts this year to about 140 basis points.
The dizzying rise in stock prices has been fueled by falling inflation and the possibility that the Fed will cut interest rates in 2024. Wall Street’s consensus on how stock indexes will finish the year has already been exceeded. On Wednesday, the index surpassed 4,867, the average level predicted by forecasters in the Bloomberg survey 11 months from now.
With the U.S. stock market at record levels, the question now for many investors is how much headroom is left in the rally that began last year. Data from Bloomberg Intelligence dating back to 1950 shows that every time the S&P 500 rose to new heights from a bear market, its subsequent six- and 12-month returns were well above average.
BI’s market performance analysis after U.S. stock benchmarks hit new highs shows a median return of about 9.2% over the next six months, higher than the median return of 6.3% for all half-years going back more than 70 years. It turned out that there was. The same pattern was seen in performance over the next 12 months, with a median return of 15% after new all-time highs, but only 13% during the overlapping annual period.
Company highlights:
-
Intel fell sharply in late trading after giving a disappointing outlook for the current fiscal year, suggesting it continues to struggle to defend its once dominant position in data center chips.
-
Alphabet Inc., Amazon.com Inc. and Microsoft Inc. have submitted information about their investments and partnerships in artificial intelligence startups Anthropic PBC and OpenAI Inc. to the U.S. Federal Trade Commission as part of a government investigation announced Thursday. is obligated to provide.
-
Apple Inc. is embarking on a historic overhaul of its iOS, Safari and App Store services in the European Union, aimed at placating regulators seeking to impose tough new antitrust laws.
-
The chorus of Boeing critics grew louder as top airline executives criticized the company over a series of quality defects that grounded planes and disrupted operations for numerous airlines.
This week’s main events:
-
US Personal Income/Expenses, PCE Deflator, Home Sales Pending, Friday
The main movements in the market are:
stock
-
As of 6:48 a.m. London time, S&P 500 futures were down 0.4%.
-
Hong Kong’s Hang Seng fell 1.3%.
-
The Shanghai Composite rose 0.2%.
-
Euro Stoxx50 futures little changed
currency
-
Bloomberg Dollar Spot Index little changed
-
The euro fell 0.1% to $1.0830.
-
The Japanese yen remained almost unchanged at 147.75 yen to the dollar.
-
The offshore yuan fell 0.1% to 7.1882 yuan to the dollar.
-
The British pound was almost unchanged at $1.2696.
cryptocurrency
-
Bitcoin rose 0.3% to $40,031.39
-
Ether remains almost unchanged at $2,216.08
bond
-
The 10-year Treasury yield fell 3 basis points to 4.09%.
-
Japan’s 10-year bond yield fell 3.5 basis points to 0.710%.
-
Australian 10-year bond yield unchanged at 4.24%
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Rita Nazareth, Joanna Ossinger, Winnie Hsu, Stephen Kirkland, and Ishika Mookerjee.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP