(Oct 23): Asian stocks were poised to open lower following a volatile session on Wall Street that saw broad losses across equities and haven assets.
Shares in Australia opened lower, while equity-index futures showed benchmarks in Tokyo and Shanghai trending lower. The Nasdaq 100 lost 1% after a tepid outlook from Texas Instruments Inc. and a 10% slump in Netflix Inc. In late hours, Tesla Inc. slid as earnings missed estimates despite a sales surge.
Adding to the jitters, traders were watching developments in Washington after the Trump administration said it’s considering curbs on software exports to China, stoking fresh trade tensions. Meanwhile, oil jumped over 2% after the US announced sanctions on Russia’s biggest producers in its latest bid to pressure President Vladimir Putin to negotiate an end to the war in Ukraine.
Wednesday was another session in which assets favored by retail momentum traders bore the worst losses, among them precious metals, crypto and companies in the artificial-intelligence space. Indexes used by quant investors to track the theme in the equity market, such as the Bloomberg US Pure Momentum Portfolio, have fallen sharply in recent days.
The last week has seen a significant cooling in enthusiasm for areas of the market that since the start of August had gone “parabolic,” according to Bespoke Investment Group.
“It appears that, at least temporarily, the music has stopped and the party has ended for the most-speculative names,” the Bespoke strategists said. “No one knows when the music will pick back up again, but usually, the higher they go, the harder they fall.”
The S&P 500 closed below 6,700. Beyond Meat Inc. whipsawed, echoing the meme-stock frenzy that periodically roil the market. The Russell 2000 lost 1.5%. In late trading, International Business Machines Corp. reported disappointing revenue in its Red Hat unit.
The yield on 10-year Treasuries fell one basis point to 3.95% on Wednesday. A $13 billion sale of 20-year bonds was strong. Bitcoin declined 2.6%, while the dollar wavered. Gold sank as much as 2.9% before paring losses.
In Japan, newly appointed Prime Minister Sanae Takaichi ordered a fresh round of economic measures to help households and businesses cope with persistent inflation.
Elsewhere in the region, Yangtze Memory Technologies Co. is weighing an initial public offering that could value the chipmaker at more than $40 billion, according to people familiar with the matter — potentially one of the largest listings in years.
US earnings
At a time when the equity rally has slowed, the flip side is that the proportion of US companies beating earnings expectations this quarter is the highest since 2021. Most S&P 500 firms typically top expectations, but this season stands out considering that analysts had set the bar higher.
Companies should continue to deliver superior earnings growth supported by a robust AI investment cycle, ongoing deficit spending and a still-resilient consumer, JPMorgan Chase & Co.’s Dubravko Lakos-Bujas says.
Meantime, the Federal Reserve has shown other US regulators the outlines of a revised plan that would dramatically relax a Biden-era bank capital proposal for Wall Street’s largest lenders, according to people familiar with the matter.
Separately, the US central bank is no longer receiving data on private-sector employment from an independent provider, adding to policymakers’ lack of timely information on the economy amid the ongoing federal government shutdown.
Payroll services firm ADP Research stopped providing the data, which covers about 20% of the US private labor force, after an Aug. 28 speech by Fed Governor Christopher Waller that referenced the statistics, according to a person familiar with the situation.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:18 a.m. Tokyo time
- Hang Seng futures fell 0.4%
- Australia’s S&P/ASX 200 fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1609
- The Japanese yen was little changed at 151.95 per dollar
- The offshore yuan was little changed at 7.1260 per dollar
- The Australian dollar was unchanged at $0.6488
Cryptocurrencies
- Bitcoin was little changed at $107,630.26
- Ether was little changed at $3,782.03
Bonds
- Australia’s 10-year yield declined one basis point to 4.10%
Commodities
- West Texas Intermediate crude rose 2.7% to $60.07 a barrel
- Spot gold fell 0.3% to $4,087.47 an ounce