(Bloomberg) — European shares are off to a subdued start after Asian shares slumped following a plunge in technology stocks. The yen was volatile.
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Euro Stoxx 50 futures were little changed, following similar cues from contracts for U.S. stocks, which stabilized after a tech-driven sell-off on Thursday.
A gauge of Asian technology stocks fell as much as 3.6%, with losses concentrated in Japan, South Korea and Taiwan. That came after the Nasdaq 100 fell 2.2% as inflation data supported the case for rate cuts, prompting an exit from the long-favored security trade in tech megacaps.
Despite the latest setback, global stock prices are poised for their sixth weekly rise, the longest since March, as Fed easing boosts overall risk sentiment. US inflation data caused traders to fully price in September’s rate cuts.
The yen rose on Friday as the Bank of Japan imposed so-called interest rate controls on traders, reinforcing the perception that authorities intervened in the market on Thursday to support the currency.
“Now that they have shown their hand and intervened, they must continue to intervene to maintain the credibility of that intervention,” said Adarsh Sinha, co-head of Asia FX & Rates strategy at BofA Securities. Bloomberg Television on Japan’s Ministry of Finance. “It remains a difficult task.”
The regional stock benchmark was heading for its worst day in almost six weeks as Japanese and Korean stocks tumbled. Shares rose in Hong Kong and Australia.
“We are seeing rotation out of the more tech-focused markets such as Taiwan and Korea, driven by the sudden sell-off in US tech,” said Gary Tan, portfolio manager at Allspring Global Investments.
Chinese shares trading in Hong Kong were on track for their best day in three weeks, buoyed by some expectations of policy support from the upcoming third plenum on the mainland. A figure for Chinese property developers rose by as much as 6.3%.
“If the shift to value remains intact, Chinese stocks may see some support,” said Jun Rong Yeap, market strategist at IG Asia Pte. Combine that “with more restrictions on short selling activity lately, which provides room for prevailing bearish sentiments to settle,” he said.
Treasury yields held steady after the prospect of lower US yields pushed 10-year yields seven basis points lower to 4.21% in the previous session. Australian and New Zealand government bonds rose on cues from their US peers.
A gauge of the dollar held steady after falling Thursday by the widest margin since May.
Fed Bank of Chicago President Austan Goolsbee described the CPI data as “excellent,” saying the report provided the evidence he has been waiting for to ensure the central bank is moving toward its 2% target.
For Morgan Stanley’s E*Trade’s Chris Larkin, Thursday’s “Fed-friendly CPI” was another step toward a September rate cut. A lingering question is whether this high-flying stock market has already priced in multiple downgrades, he noted.
China’s trade surplus rose to its highest level since at least 1990 in June, according to key Asian data, as exports rose more than expected while imports unexpectedly weakened. Other reports due Friday include Japan’s industrial production and Indian inflation. Data on China’s money supply and new loans could also be released as early as Friday.
In Europe, Ericsson AB’s profits exceeded analyst expectations in the second quarter, helped by cost-cutting measures to cope with what the Swedish company called a “challenging market environment.”
West Texas Intermediate oil rose for a third day on Friday, helped by the CPI. Gold fell on Thursday after a sharp rally.
Main events this week:
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University of Michigan Consumer Confidence, American PPI, Friday
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Citigroup, JPMorgan and Wells Fargo’s earnings, Friday
Some of the major moves in the markets:
Shares
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Futures on the S&P 500 were unchanged at 2:40 p.m. Tokyo time
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Nasdaq 100 futures fell 0.1%
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Japan’s Topix fell 1.3%
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Australia’s S&P/ASX 200 rose 0.8%
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Hong Kong’s Hang Seng rose 2.2%
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The Shanghai Composite had changed little
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Euro Stoxx 50 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0870
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The Japanese yen fell 0.1% to 159.07 per dollar
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The offshore yuan fell 0.1% to 7.2751 per dollar
Cryptocurrencies
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Bitcoin fell 0.9% to $57,063.41
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Ether fell 1% to $3,084.36
Bonds
Raw materials
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West Texas Intermediate crude rose 0.4% to $82.91 a barrel
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Spot gold fell 0.4% to $2,405.95 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Charlotte Yang.
(Updates with prices; an earlier version corrected the description of the US core CPI.)
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