Most Asian Stocks Fall After Big Tech Disappoints: Markets Wrap – Yahoo Finance

July 23, 2024

(Bloomberg) — Most Asian stocks fell, following a sell-off on Wall Street after the “Magnificent Seven” giants got off to a weak start with earnings reports.

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Stock indexes in Japan, Hong Kong and mainland China all fell, while South Korea’s index alternated between rises and falls. U.S. stocks fell on Tuesday as traders assessed performance from major American companies such as Tesla and Alphabet. Taipei’s stock exchange was closed because of the typhoon, and technology giant Taiwan Semiconductor Manufacturing Co. was not trading.

Investors had hoped that tech gains would help sustain the bull market that has driven U.S. and global stocks to record highs. But that didn’t materialize as Alphabet Inc.’s stocks tumbled after its CEO suggested patience was needed to see tangible results from its investments in artificial intelligence. Electric car maker Tesla Inc. slumped 7% after it reported weaker-than-expected profits and postponed its robotaxi event until October. Tesla and electric car companies in Asia were mostly down.

“Given the high earnings expectations of the Magnificent Seven, these companies will have a lot to prove,” said Anthony Sagrimbene at Ameriprise. “At the same time, their prospects will likely be heavily scrutinized relative to their inflated valuations.”

The yen rose for a third straight day to approach 155 to the dollar as traders prepared for the Bank of Japan’s policy meeting next week. Only about 30% of BOJ watchers expect the agency to raise interest rates on July 31, but more than 90% say there is a risk of such a move, according to a Bloomberg survey.

Asia-based currency traders said the dollar/yen’s intraday gains were being sold by retail accounts in Tokyo as expectations grew over a possible 15 basis points interest rate hike by the Bank of Japan.

The Bloomberg Dollar Index hit its highest level in nearly two weeks before erasing gains.

Investors are also focusing on China’s market, which has lost steam due to economic troubles and geopolitical risks. Short interest on China’s stock exchanges fell to the lowest level in more than four years to 27.9 billion yuan ($3.8 billion) on Monday, the day new Chinese measures to curb short selling took effect, the China Securities Journal reported on Wednesday.

Redemptions at China’s equity mutual funds hit their highest level since 2005 in the second quarter, with more than half of the best-performing products seeing net selling by existing investors, according to Cheung Kong Securities.

Typhoon Gami is approaching Taiwan bringing strong winds and heavy rains, forcing Taipei to suspend its $2.4 trillion stock market. Trading in securities, currencies and bonds will be halted on Wednesday, the bourse said. The Philippines will also close financial markets, schools and offices after the typhoon hit Manila.

The strong performance on Wall Street will provide a much-needed boost to stocks after a strong first half of the year. The market is under pressure amid a seasonally weak period and the possibility of increased volatility due to the U.S. presidential election. In addition to the woes of big technology companies, United Parcel Service (UPS) suffered its biggest sell-off on record after missing profits.

The Big Five U.S. technology companies are facing a tougher earnings cycle than last year’s stellar earnings cycle, with the group’s profits expected to rise 29% in the second quarter from a year earlier, according to data compiled by Bloomberg Intelligence.

In Asia, 10-year Treasury futures edged lower as investors await Wednesday’s Treasury auction and U.S. manufacturing PMI data. Crude oil fell on algorithmic selling and a summer liquidity slump. Gold held on to gains as key U.S. economic data this week is expected to provide the basis for an interest rate cut.

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