Asian markets track Wall St losses after mixed tech earnings

Asian markets track Wall St losses after mixed tech earnings

While earnings at Google-parent Alphabet topped estimates, fellow 'Magnificent Seven' member Tesla announced a plunge in profits
While earnings at Google-parent Alphabet topped estimates, fellow 'Magnificent Seven' member Tesla announced a plunge in profits. Photo: Drew Angerer / GETTY IMAGES NORTH AMERICA/Getty Images via AFP
Source: AFP

Asian markets fell on Wednesday following a mixed batch of US earnings that did little to boost enthusiasm as investors look for the tech sector to continue filing blockbuster profits after pumping billions into artificial intelligence.

Traders are also shifting cautiously as they weigh the outlook for US policy post-election, with Democrat chances boosted by the expected nomination of Kamala Harris to replace Joe Biden to battle Donald Trump in November.

Equities have largely been boosted this year by growing expectations that the Federal Reserve will cut interest rates thanks to slowing inflation and a softening of the labour market, officials have indicated lately they are open to a move soon.

The prospect of a more welcoming borrowing environment has heavily benefited tech firms, particularly as they have invested massively in AI, seeing it as the next big money-spinner.

Read also

Tesla reports profit drop on price cuts, lower vehicle sales

And profits have not disappointed in most cases, helping push their valuations ever higher, with chip titan Nvidia piling on around 150 percent for the year to date.

However, hopes for this earnings cycle were dented slightly Tuesday by news that profits at electric car giant Tesla fell 45 percent in the second quarter owing to price cuts and aggressive AI investment.

PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!

And payments behemoth Visa's reported revenue for its fiscal third quarter came in below estimates, though a forecast-beating report from Google-parent Alphabet did provide some support.

Alphabet and Tesla are part of the so-called "Magnificent Seven" tech kings who have been key to driving gains in markets that have pushed Wall Street to multiple record highs in 2024.

The others -- Apple, Amazon, Facebook-parent Meta, Microsoft and Nvidia -- are due to report over the next few weeks.

Read also

Most Asian markets rise after US rally ahead of inflation report

"The kickoff of earnings season for the 'Magnificent Seven' didn’t exactly call for a ticker-tape parade on Wall Street, leaving mega-cap sentiment teetering on a shaky high bar," said Stephen Innes in his Dark Side Of The Boom commentary.

All three main indexes on Wall Street ended slightly lower, and Asia mostly followed suit.

Tokyo, Shanghai, Hong Kong, Sydney, Singapore and Jakarta all slipped, though Seoul and Wellington edged up.

Manila and Taipei were closed because of a typhoon.

Investors are also awaiting the release of key US economic growth data Thursday and the latest reading on personal consumption expenditure -- the Fed's favoured gauge of inflation -- which could play a role in decision-makers' thinking ahead of their next meeting.

But Innes warned: "Markets are wagering that these indicators will give the Fed the green light to take it easy in September. However, any hiccup in the cooling inflation trend could add a plot twist to this Fed soap opera."

Read also

China central bank cuts two key rates to support flagging economy

Still, PGIM Fixed Income analysts said in a note: "We expect at least one 25-basis-point cut in 2024 with mid-December appearing as the most likely meeting for that decision.

"That said, the Fed could implement another cut in the second half of 2024 if given the opportunity. If the Fed is hindered from cutting rates this year, it could shift those cuts into 2025, and we see a total of 150 basis points in Fed rate cuts through next year."

Key figures around 0230 GMT

Tokyo - Nikkei 225: DOWN 0.2 percent at 39,508.84 (break)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 17,414.96

Shanghai - Composite: DOWN 0.2 percent at 2,910.17

Euro/dollar: DOWN at $1.0845 from $1.0855 on Tuesday

Pound/dollar: DOWN at $1.2895 from $1.2907

Dollar/yen: DOWN at 155.30 yen from 155.62 yen

Euro/pound: UP at 84.11 pence at 84.08 pence

West Texas Intermediate: UP 0.4 percent at $77.27 per barrel

Read also

Asian markets drop as Biden drops out of White House race

Brent North Sea Crude: UP 0.4 percent at $81.34 per barrel

New York - Dow: DOWN 0.1 percent at 40,358.09 points (close)

London - FTSE 100: DOWN 0.4 percent at 8,167.37 (close)

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.