An electronic stock board displayed inside the Kabuto One building in Tokyo, Japan, on Thursday, 4 January 2024. 
Stocks in Japan, Australia and China all declined, putting the MSCI Asia Pacific gauge on course for its first loss in three days. US equity futures slipped after big tech was hit by Micron Technology Inc.’s outlook that failed to meet the lofty expectations for the industry that has powered the bull market in stocks.
The yen was marginally higher on Thursday after dropping 0.7% in the prior session when it touched 160.87 per dollar, the weakest since 1986 and well past the level where officials intervened in April. The currency has lost more than 12% against the greenback this year.
An emerging-market currency gauge dropped to near its lowest in two months and a gauge of Asian currencies fell to levels last seen in 2022 as traders flocked to the safety of the dollar. Treasuries extended their recent declines on concern that Friday’s US PCE data will show inflation remains elevated.
“It’s all about the Fed — higher for longer is keeping the front end of rates very high, drawing money into the US and keeping the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities LLC. For Japan, “it’s a problem,” he said.
Micron Technology shares slumped after the maker of computer memory chips projected sales that trailed the estimates of some investors. The news dragged down some chipmakers including giant Nvidia Corp.
Also after Wall Street’s close, the Federal Reserve said the biggest US banks passed the annual stress test, paving the way for higher shareholder payouts.
The recent market attempt to broaden out of the mega cap group was short-lived, with a bevy of measures still showing how market breadth remains weak — boosting uncertainty about the rally’s staying power. Bifurcation between S&P 500 performance and breadth has reached one of the worst levels in three decades, according to Bloomberg Intelligence.
“The stock market is way too reliant on big tech — period and end of story,” said David Bahnsen at The Bahnsen Group. “Whether or not the past week’s volatility in tech is the start of something deeper or if that reckoning is still forthcoming remains to be seen, but excessive investor sentiment, euphoria and overdone momentum always ends the same.”
Elsewhere, Asia Pacific companies and governments’ sales of dollar bonds in the primary market hit a nine-month high this week, as issuers look to lock in historically tight spreads before they climb further.
India’s $1.3-trillion sovereign debt market has become a magnet for global investors. However, this newfound interest highlights how difficult doing business in the world’s most populous country can be for outsiders.
In commodities, gold steadied after a two-day decline, while West Texas Intermediate edged lower.