(Bloomberg) — Asian stocks were set to open lower after U.S. technology shares fell in late trading and the yen weakened, stoking fresh speculation that authorities might step in to support currencies.
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Stock futures in Japan, Australia and Hong Kong fell, a sign that regional shares could be on the verge of a pullback after two days of gains.Big technology companies were hit late in the U.S. market after Micron Technology Inc’s outlook failed to meet lofty expectations for the industry that has driven a bull market in stocks.U.S. stock contracts fell in early Asian trading.
The yen was trading sideways early Thursday after a sharp drop the previous day to nearly 160.9 to the dollar, its lowest level since 1986 and well above the level at which authorities intervened in April. The yen has fallen about 14 percent against the dollar this year.
The dollar strengthened as the yen weakened. The dollar index hit its highest level since November on Wednesday. Treasury bonds sold off, with the 10-year yield rising 8 basis points to above 4.3%, while sales of five-year notes rose to $70 billion in a sign of strong demand.
“It’s all down to the Fed. If interest rates stay high for a long time, short-term interest rates stay very high, which attracts capital into the U.S. and keeps the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities. “That’s a problem” for Japan.
Computer memory chip maker Micron Technology Inc.’s shares fell sharply after its forecast sales fell short of some investors’ expectations, news that dragged down shares of several chip makers, including company giant Nvidia Corp.
Also after Wall Street closed, the Federal Reserve announced that major U.S. banks had passed their annual stress tests, paving the way for them to increase dividends to shareholders.
Recent attempts at broadening from the market’s biggest stocks have been short-lived, and a range of indicators point to continued weakness in market breadth, raising uncertainty about the sustainability of the rally. The gap between the S&P 500’s performance and breadth has reached its worst level in three decades, according to Bloomberg Intelligence.
“The stock market is too reliant on big tech companies, that’s all there is to it,” said David Bahnsen of the Bahnsen Group. “Whether last week’s volatility in the tech sector is the start of something much deeper, or that verdict remains to be seen, but excessive investor sentiment, euphoria and excess momentum always lead to the same outcome.”
Elsewhere in Asia, data is due to be released on Japan’s retail sales, Australia’s job openings and China’s industrial profits. The Philippines is also due to announce a monetary policy decision.
In commodity markets, gold fell to its lowest level in nearly three weeks, while West Texas Intermediate (WTI) was little changed.
Major events this week:
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China industrial profits Thursday
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Eurozone economic confidence, consumer confidence on Thursday
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U.S. durable goods, jobless claims, GDP on Thursday
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Nike reports earnings on Thursday
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Japan Tokyo Consumer Price Index, unemployment rate, industrial production, Friday
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US PCE Inflation, Spending and Income, University of Michigan Consumer Confidence, Friday
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Fed President Thomas Barkin to speak on Friday
Some of the key market developments:
stock
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S&P 500 futures were down 0.2% as of 7:19 a.m. Tokyo time.
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Hang Seng futures fell 0.6%
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S&P/ASX 200 futures down 1.1%
currency
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The Bloomberg Dollar Spot Index rose 0.4%.
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The euro was unchanged at $1.0681.
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The Japanese yen was almost unchanged at 160.72 yen to the dollar.
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The offshore yuan was little changed at 7.3001 per dollar.
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The Australian dollar was unchanged at $0.6648
Cryptocurrency
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Bitcoin little changed at $60,961.26
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Ether rose 0.1% to $3,394.05.
merchandise
This story was produced with assistance from Bloomberg Automation.
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