(Times Of Update) — European stocks were set for a tepid start to trading after Asian stocks were mostly higher as traders weighed expectations for stronger Federal Reserve interest rate cuts against continued weakness in technology stocks.
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Euro Stoxx 50 futures were little changed, while U.S. stock futures rose after a decline on Wall Street overnight. The yen gained against the dollar, while Treasuries were flat ahead of key U.S. inflation data later on Friday.
Australian, Japanese, Hong Kong and South Korean stocks rose Friday, as did U.S. stock futures. Chinese stocks in Hong Kong and mainland China fluctuated.
Taiwanese stocks were the worst performers, falling 4.3% as trading resumed after disruptions caused by Typhoon Gaemi. The declines marked a recovery from earlier technology-related declines in global stocks and included a sharp decline for Taiwan Semiconductor Manufacturing Co., which fell as much as 6.5%.
Asian stocks are set for their first straight week of losses since May as the global rotation away from technology stocks – particularly those benefiting from the AI boom – and into this year’s laggards accelerated this week. An index of technology stocks in Asia is set for a third straight day of losses.
“We have not yet called a peak for AI in Asia, but we feel we are getting closer,” HSBC Holdings Plc strategists including Herald van der Linde wrote in a note. The dynamics are changing rapidly and “we are now even more convinced that the sector deserves serious attention.”
Chinese government bond yields fell to a fresh record low as the bond rally dragged on, testing policymakers’ resolve to stem the trend. Meanwhile, the CSI 300 index headed for its worst week since early February as traders sought safe-haven assets amid a faltering economic recovery.
“Stimulus measures don’t seem to have an effect on market sentiment until they translate into higher earnings,” said Marvin Chen of Times Of Update Intelligence. “From that perspective, the upcoming earnings season in August could be a catalyst, but expectations are not high.”
The yen traded below 154 per dollar in choppy trading and headed for its fourth day of gains in five sessions. Inflation in Tokyo accelerated for the third straight month in July, bolstering bets that interest rates could rise at the central bank’s policy meeting next week.
“To convincingly move below 150, we need the Fed to deliver, or Japanese institutions to sell more foreign bonds,” Tim Baker, head of macroeconomic research at Deutsche Bank AG, said on Times Of Update Television.
The yen’s rally remains fragile, with only 30% of BOJ watchers surveyed by Times Of Update predicting a rise, although more than 90% see it as a risk.
A return to 155.30 per dollar is “not out of the question” before the BOJ meeting, said Tony Sycamore, an analyst at IG Australia Pty. Ltd. “However, after that, all bets are…
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