(Bloomberg) — Asian technology stocks rose after impressive earnings reports from Microsoft and Alphabet last night. The yen once again fell to its lowest level in 34 years after the Bank of Japan left its key interest rates unchanged.
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Stocks in the region were heading for their best week since November, supported by gains in tech giants such as Samsung Electronics, Taiwan Semiconductor Manufacturing and Tencent Holdings. Benchmarks for Japan, South Korea, Taiwan, and China all rose.
The weaker yen also supported Japanese stocks. Following the Bank of Japan's decision, the currency reversed its initial gains and fell to 156 yen to the dollar, its lowest level since 1990. The Bank of Japan on Friday kept its policy interest rate range unchanged at 0%-0.1%, as expected by most economists, according to a statement.
“The Bank of Japan definitely sees upside risks to inflation,” Peiqiang Liu, Asia economist at Fidelity International, said on Bloomberg TV. He said the yen's decline reflected the disappointment of investors who had expected a more hawkish stance from the central bank.
U.S. stock futures rose after Microsoft and Alphabet both beat Wall Street's profit expectations. Snap Inc. also rose in late trading after bullish earnings forecasts. The S&P 500 and Nasdaq 100 traded higher, reversing Thursday's losses.
BHP Group shares fell on news of a takeover bid for Anglo American, and Australian shares also fell.
Asian government bond prices were little changed after further declines on Thursday, when the latest U.S. data dented hopes of a Federal Reserve rate cut. Australia's 10-year bond yield rose more than 10 basis points (bp), while New Zealand's yield on the same maturity rose about 7 basis points. Japan's 10-year bond yield hit its highest level since November.
US core PCE price index data released on Thursday rose 3.7%, higher than expected. This print, combined with US gross domestic product data that fell short of all forecasts, reignited fears of stagflation. The core PCE deflator, the Fed's preferred inflation measure, is expected to be released later Friday.
“This report is the worst in terms of slowing economic growth and continuing inflationary pressures,” said Chris Zaccarelli of the Independent Advisor Alliance. “The Fed wants inflation to start falling sustainably, but the market wants economic growth and corporate profits to rise.”
Elsewhere, gold was little changed on Friday as the precious metal headed for a weekly decline after rising to record highs earlier this month. West Texas Intermediate rose to its highest point in more than a week, on pace for weekly gains.
technology optimism
The $250 billion exchange-traded fund (ETF) that tracks the Nasdaq 100 (ticker: QQQ) rose 1.2% after the close of regular trading on Thursday. That came after Alphabet announced a dividend after significantly lower than expected sales. Fellow giant Microsoft also beat expectations, boosted by corporate demand for the software maker's cloud and artificial intelligence products.
Investors have shown they are excited about the promise of AI, but in the meantime they want tech companies to remain focused on revenue and profits.
Like other big technology companies, Alphabet has been pouring money into developing AI, a strategy that has helped drive demand for its cloud services. Google ranks third in the cloud computing market behind Amazon.com and Microsoft, but its AI capabilities could help close the gap.
This week's main events:
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US Personal Income and Expenditures, PCE Deflator, University of Michigan Consumer Sentiment, Friday
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ExxonMobil, Chevron earnings, Friday
The main movements in the market are:
stock
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S&P 500 futures were up 0.8% as of 1:39 p.m. Tokyo time.
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Nasdaq 100 futures rose 1.1%
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Japan's TOPIX rose 1%
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Australia's S&P/ASX 200 falls 1.3%
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Hong Kong's Hang Seng rose 2%
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The Shanghai Composite rose 0.8%.
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Euro Stoxx50 futures rose 0.7%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0722.
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The Japanese yen fell 0.3% to 156.17 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2614 yuan to the dollar.
cryptocurrency
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Bitcoin fell 0.8% to $64,293.51.
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Ether fell 1.1% to $3,138.37.
bond
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The 10-year Treasury yield fell 1 basis point to 4.69%.
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Japan's 10-year bond yield rose 2 basis points to 0.910%.
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The Australian 10-year bond yield rose 13 basis points to 4.53%.
merchandise
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West Texas Intermediate crude rose 0.3% to $83.86 per barrel.
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Spot gold rose 0.1% to $2,335.05 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Rita Nazareth.
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