Moving markets today: Asian stocks dip as Meta sparks tech rout; yen drops below ¥155; Meta stock falls 15 per cent, oil and gold stable; focus on US Q1 GDP, Alphabet, Microsoft, and Intel earnings
In a volatile trading session, the S&P 500 closed higher as investors assessed the impact of rising Treasury yields alongside positive corporate earnings, particularly from major technology companies. However, Asian stock markets experienced a downturn, largely influenced by a decline in the tech sector, while the Japanese yen weakened, breaching a threshold that could prompt intervention. Meta’s shares plunged over 15 per cent after announcing plans for increased spending on artificial intelligence. Oil prices eased due to concerns about US demand, despite ongoing tensions in the Middle East. Gold prices remained steady as market focus shifted towards upcoming US economic data. BHP made a significant move by proposing a takeover of Anglo American. Thursday’s attention will be on the initial reading of US GDP growth for the first quarter, with investors closely monitoring tech giants such as Alphabet, Microsoft, and Intel, all scheduled to report earnings later in the day. Here are five key takeaways for your day.
Yen dips below ¥155 against US dollar, raising intervention concerns
The Japanese yen reached a milestone not seen since 1990, surpassing the ¥155 mark against the US dollar. This reflects its ongoing decline amidst the resilience of the US economy, despite increased borrowing costs. Conversely, the dollar saw a slight uptick of 0.1 per cent against a basket of six major currencies.
Speculation was rife about potential intervention by Japanese authorities to bolster the yen, which had hindered the dollar’s progress toward the psychologically significant ¥155 level. Some market participants view this level as a trigger point that might prompt action from Tokyo.
This breach of the ¥155 yen level coincides with the Bank of Japan (BOJ) meeting to deliberate on monetary policy. However, expectations are that the central bank will maintain its short-term interest rate target unchanged, following its significant departure from negative rates last month.
Meta stock tumbles 15 per cent on increased AI spending; revenue guidance disappoints
Shares of Meta, the US tech giant known for Facebook and Instagram, took a hit despite reporting earnings that exceeded predictions. The company indicated a significant increase in expenses for the year ahead, particularly in AI investments, leading to a more than 15 per cent drop in its stock price to $418.85 in after-hours trading.
Meta’s updated forecast for 2024 suggests it will spend billions more than previously anticipated. Looking ahead to April-June revenue, Meta expects to generate between $36.5 billion and $39 billion, with a midpoint of $37.8 billion. However, this projection falls short of analysts’ expectations of $38.3 billion, as reported by Reuters.
BHP unveils proposal for Anglo American takeover
BHP has proposed a takeover bid for Anglo American, which could become one of the largest deals in the mining sector in recent years, bringing together two major players in the industry.
The offer suggests a merger between BHP, the world’s largest mining company, and Anglo American, a company with a 107-year history. This move is aimed at expanding BHP’s copper mining portfolio, a crucial metal in the transition towards renewable energy, as indicated by insiders familiar with the situation, the FT reported.
Anglo American has acknowledged receiving the proposal from BHP, describing it as “unsolicited, non-binding, and highly conditional.” However, the company has emphasized that there’s no certainty regarding the potential offer, including the terms on which it might be presented.
What’s on the radar
Investors are eagerly awaiting earnings reports from major players across different industries, with a keen eye on tech giants like Intel, Microsoft, and Alphabet. Microsoft’s performance holds particular interest due to its significant involvement in the AI and cloud computing sectors. Companies such as Southwest Airlines, Merck&Co, T-Mobile US, and Honeywell are also under the spotlight.
Across the pond in the UK, attention is focused on AstraZeneca, London Stock Exchange, Unilever, and Barclays.
Apart from corporate earnings, investors are closely monitoring economic indicators. This includes the release of first-quarter US gross domestic product (GDP) data, expected on Thursday, and personal consumption expenditures for March, which serve as the Fed’s preferred measure of inflation. Economists predict a growth rate of 2.5 per cent for US Q1 2024 GDP, compared to a 3.4 per cent increase in the fourth quarter of 2023.
Additionally, there’s anticipation surrounding the publication of weekly jobless claims figures and foreign trade and pending home sales data for March.
Asian equities take hit as Meta news triggers tech sell-off
The S&P 500 made a tiny gain, ending at 5,071.68 points, while the Nasdaq Composite edged up to 15,712.75. However, the Dow Jones Industrial Average slipped to 38,462.33.
Boeing’s shares declined after reporting its first revenue drop in seven quarters, even though it exceeded analyst predictions. On the flip side, Tesla saw a significant jump of over 10 per cent as investors responded positively to its plans for ramping up production and introducing more affordable models, which overshadowed its less-than-stellar quarterly performance.
In Asia, a sell-off in tech stocks had a significant impact, with Japan’s Nikkei N225 plummeting nearly 2 per cent, and Chinese stocks, including the CSI300 index, also taking a hit, alongside a 0.5 per cent dip in Hong Kong’s Hang Seng Index.
Turning to commodities, oil prices experienced a slight increase as concerns about a potential economic slowdown in the US outweighed fears of escalating tensions in the Middle East. US crude saw a marginal increase to $82.86 per barrel, while Brent reached $88.11, up 0.10 per cent for the day.
Meanwhile, spot gold saw a rise of 0.22 per cent to $2,320.99 per ounce.