Asian stocks fell after US technology faltered, with the dollar and yields holding on to gains

SYDNEY (Reuters) – Asian stocks fell on Friday after earnings reports from Tesla and Netflix failed to come out, while dollar and Treasury yields held on to gains ahead of an action-packed week that could see the end of the tightening cycle in the United States.

European stocks are set to open lower, with EUROSTOXX 50 futures down 0.3%. S&P 500 futures and Nasdaq futures rose 0.1%.

In addition to the US Federal Reserve and European Central Bank meetings next week, the Bank of Japan will meet amid speculation of an imminent policy adjustment. Early Friday, Japan’s inflation remained above the central bank’s 2% target for the 15th consecutive month in June, but gains matched median market expectations.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.5%, heading for a weekly loss of 1.8%. Meanwhile, Japan’s Nikkei (.N225) lost 0.6%.

The technology sub-index (.MIAPJIT00NUS) fell 2.2%. Shares of Taiwanese chipmaker TSMC (2330.TW) fell 3.3%, after the world’s largest chipmaker reported a 10% drop in 2023 sales.

Blue-chip stocks in China (.CSI300) fluctuated 0.2% while Hong Kong’s Hang Seng Index (.HSI) rose 0.4%.

The yuan was range bound on Friday after authorities stepped up efforts to defend the currency’s weakness, along with yuan purchases by state-owned banks.

Concerns are also growing about the health of Chinese property developers, after ratings agencies warned that Wanda Commercial could default on its debt. Country Garden (2007.HK) dollar bonds fell on Friday.

“The Chinese real estate sector has entered its longest downward trend in the past two decades, and the worst may not be over,” said Betty Wang, chief China economist at ANZ.

“At the current stage, there is no single drug available. Multipronged efforts are needed to prevent further slippage.”

Expectations are growing for more policy support ahead of the Politburo meeting at the end of July. Beijing on Friday released some new consumer aid and electronics measures, which failed to generate much excitement in the market.

On Wall Street, after rising about 40% since the turn of the year, the Nasdaq (.IXIC) index fell 2% overnight, its biggest one-day loss since March, driven by sharp falls after earnings in tech giants Tesla (TSLA.O) and Netflix (NFLX.O).

The electric vehicle maker reported a drop in gross margins for the second quarter to a four-year low, while the live video streaming company’s quarterly revenue fell short of estimates.

Also, an unexpected drop in weekly jobless claims in the US fueled expectations for a strong jobs report, after markets braced for higher interest rates in the US and Europe.

They raised the chance of a second Fed hike by November to 33%, and slightly reduced the size of next year’s rate cuts to just under 100 basis points.

Ten-year Treasury yields were mostly flat in Asia at 3.8487%, after rising 11 basis points overnight, while two-year Treasury yields were flat at 4.8286%, after rising 8 basis points overnight.

The US Dollar Index was little changed at 100.78, after advancing 0.5% overnight, the biggest one-day gain since mid-May. The Australian dollar gave up almost all of its gains after the strong local jobs data hovered below 68 cents.

Markets are looking forward to next week when the Federal Reserve, European Central Bank and Bank of Japan meet to decide on their policy and discuss interest rate outlook.

“While we expect July to bring the Fed’s last rate hike of the cycle, we don’t think the Fed is comfortable signaling this shift yet. Instead, policymakers seem more comfortable maintaining a hawkish stance for now,” said analysts at TD Securities.

Elsewhere, oil prices have been higher. Brent crude futures rose 0.8% to $80.27 a barrel, and US West Texas Intermediate crude futures rose 0.8% to $76.25.

Gold prices settled at $1,969.95 an ounce.

Reporting by Stella Keough; Edited by Lincoln Feast

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