Asia Stocks, Yen Yentative with Eyes on BOJ Decision

Asian technology shares rose following stellar earnings reports from Microsoft Corp. and Alphabet Inc. after US markets closed. The yen traded in a narrow range before a Bank of Japan policy decision.

Equity benchmarks in Japan and South Korea both rose, with the latter helped by Samsung Electronics Co. Those in China and Taiwan also gained, with tech stocks advancing. Australia’s S&P/ASX 200 fell, weighed down by its largest constituent, BHP Group Ltd., following news of its takeover bid for Anglo American Plc.

US stock futures rallied after Microsoft and Alphabet both beat Wall Street profit estimates. Snap Inc. also climbed in late trading on a bullish revenue projection.

The BOJ will consider measures to shrink government bond purchases at Friday’s meeting, according to a report from Jiji. Policymakers are forecast to leave rates unchanged after the yen slid to the lowest level against the dollar since 1990 this week. Japan’s 10-year yield rose to the highest since November in early trading.

Treasuries were little changed in Asia following further losses on Thursday when the latest US data pushed back expectations for Federal Reserve interest-rate cuts. Australian 10-year yields jumped more than 10 basis points, while similar-maturity New Zealand’s yields climbed around seven basis points.

US core PCE price index data published Thursday advanced at a faster-than-expected 3.7% clip. The print combined with a US gross domestic product data that trailed all forecasts to rekindle the specter of stagflation.

“This report was the worst of both worlds: economic growth is slowing and inflationary pressures are persisting,” said Chris Zaccarelli at Independent Advisor Alliance. “The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing.”

Tech Optimism

A $250 billion exchange-traded fund tracking the Nasdaq 100 (ticker: QQQ) climbed 1.2% after the close of regular trading on Thursday. In a sigh of relief to investors worried about lofty valuations of the sector that has powered the bull market, Alphabet crushed sales estimates and announced a dividend. Fellow megacap Microsoft also beat forecasts, lifted by corporate demand for the software maker’s cloud and artificial-intelligence offerings.

Investors have shown they are excited about the prospects of AI — but want tech companies to continue to focus on revenue and profit in the meantime.

Like other big techs, Alphabet has been plowing money into developing AI, a strategy that has helped drive demand for its cloud services. Google is a distant third in the cloud-computing market, trailing Amazon.com Inc. and Microsoft, but the company’s prowess in AI could help it close the gap. Reuters 

April 26, 2024