Headline: Asian Markets Poised for Cautious Trading Amid Global Tech Sell-Off
Asian markets are expected to open cautiously on Thursday, influenced by declines in global tech stocks and rising U.S. bond yields. Investors are recalibrating their expectations amid increasing speculation that the U.S. Federal Reserve may not cut interest rates as much as previously anticipated.
NASDAQ experienced a notable 1.6% drop on Wednesday, marking its largest decline in nearly two months, contributing to global markets' third consecutive day of losses. Despite the negative sentiment, a post-market 8% rise in NASDAQ:TSLA shares following Tesla's third-quarter earnings report could lend some support to the tech sector in Asia.
Asian markets will also be assessing a series of key local economic data to be released on Thursday. This includes purchasing managers' index (PMI) reports from Japan, India, and Australia, South Korea's third-quarter GDP figures, and inflation data from Malaysia.
Currency markets are closely watching the Japanese yen, which continued its slide, surpassing the 152.00 level on Wednesday. The yen's move above its 200-day moving average indicates a potential for further weakening, sparking discussions about possible intervention by Japanese authorities to halt the decline. However, given that key financial officials, including Bank of Japan Governor Kazuo Ueda, are attending meetings in Washington and with upcoming general elections in Japan, immediate intervention seems unlikely.
Brad Bechtel from Jefferies expressed skepticism about immediate action, saying, "I don't think they'll do anything unless we quickly sail through 160.00 for some reason." Three weeks ago, Japan's Ministry of Finance warned against speculative trading when the yen dropped below 149 against the dollar. Japan last intervened to support the yen at the end of July when it dipped below 161 against the dollar, a 38-year low.
Speaking in Washington on Wednesday, Ueda acknowledged the challenges Japan faces in achieving a sustainable 2% inflation rate and highlighted the difficulty in determining the appropriate scale of rate hikes. Tokyo inflation data due on Friday could provide further insight into Japan's inflation pressures, with a Reuters poll indicating a 1.7% rise in consumer prices for September.
In other currency news, South Korea's finance minister suggested that the current won-dollar exchange rate around 1,400 might be the "new normal." Economic data expected on Thursday could show South Korea's economy returning to growth in the third quarter after a 0.2% contraction in the previous quarter.
Notable events expected to influence market direction on Thursday include PMI reports from Japan, India, and Australia, South Korea's third-quarter GDP, and Malaysia's September inflation figures.