Asian Stocks Set to Fall, Yen Steady Ahead of BOJ: Markets Wrap

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(Bloomberg) — Stocks in Asia are poised to fall in early Friday trading as a rally in US shares outside of AI-related names stalled. The yen was steady ahead of a Bank of Japan policy decision.

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Equity futures for benchmarks in Australia, Japan and Hong Kong all pointed to losses. Treasuries climbed following softer producer price data, while the S&P 500 notched a fourth straight record as Broadcom Inc. led a rally in chipmakers. Only about a third of stocks in the index gained.

“The breadth was poor. It was tech that saw all the gains,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “The weights of tech stocks on Asian equity markets is far lower.”

Treasury 10-year yields fell seven basis points to 4.24% as the producer price index unexpectedly declined the most in seven months, adding to evidence that inflationary pressures are moderating. Several categories that are used to calculate the Fed’s preferred inflation measure — the personal consumption expenditures price index — were softer in May than a month earlier. Separate Labor Department data showed initial applications for US unemployment benefits jumped.

“The latest data in hand nudges the door a little wider open for the Fed to begin making an interest rate cut later this year,” said Bill Adams at Comerica Bank, which forecasts Fed reductions in September and December.

In Asia, traders will be monitoring the BOJ’s policy decision later Friday in expectation the central bank will consider reducing bond purchases. The yen was steady around 157 per dollar on Friday while Japanese bond futures nudged higher.

“In our view, the BOJ can fall short of those expectations which can push down Japanese interest rates and the yen today,” said Kristina Clifton, a senior economist and strategist at Commonwealth Bank of Australia in Sydney. “Communications from officials suggest it wants to take its time to adjust its policy settings again.”

Tesla Jumps

The S&P 500 topped 5,430. Tesla Inc. jumped after Elon Musk said shareholders backed his compensation package. Broadcom Inc. lifted chipmakers after announcing solid earnings and a 10-for-1 stock split. GameStop Corp. climbed as Keith Gill, known as “Roaring Kitty,” posted on X.

A historically strong start to the year for the US stock market should continue into the second half of 2024, according to JPMorgan Chase & Co.’s asset management division.

While the move may look more like a grind than a rocket ride after the S&P 500’s double-digit return since January, solid earnings, the end of the Fed’s monetary-tightening campaign and economic strength will continue to lift US equities in the coming months, strategists at the firm led by David Kelly wrote. They recommend buying large-cap shares and a mix of value and growth stocks.

Elsewhere, the European Union’s bonds got hit as bets they would soon be added to key sovereign benchmarks received a blow, undermining the bloc’s efforts to broaden the appeal of its debt. Heightened political risk in France drove the premium on the nation’s 10-year bonds to the widest since 2017 over German peers.

In commodities, oil fluctuated between a gain and loss before settling below $78 a barrel. Gold held Thursday’s decline, wher it slipped for the first time in four days.

Key events this week:

Bank of Japan’s monetary policy decision, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
US University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 7:29 a.m. Tokyo time
Hang Seng futures fell 0.7%
S&P/ASX 200 futures fell 0.1%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0739
The Japanese yen was little changed at 157.01 per dollar
The offshore yuan was little changed at 7.2699 per dollar

Cryptocurrencies

Bitcoin rose 0.3% to $66,885.51
Ether was little changed at $3,479.3

Commodities

This story was produced with the assistance of Bloomberg Automation.