Contrasting Dynamics

Asian shares slid Friday as investors evaluated the latest raft of corporate earnings, including those from tech stocks, which had a poor day on Wall Street and weighed on overall investor sentiment.

KEEPING SCORE: Japan’s benchmark Nikkei 225 index sank 0.4 percent to 19,994.54 and South Korea’s Kospi slumped 1.2 percent to 2,414.08. Hong Kong’s Hang Seng lost 0.5 percent to 26,995.76 while the Shanghai Composite index in mainland China dipped 0.1 percent to 3,245.77. Australia’s S&P/ASX 200 tumbled 1.3 percent to 5,709.70. Benchmarks in Southeast Asia were mixed.

EARNINGS SEASON: A swoon in technology stocks on Wall Street was setting the tone for trading in markets more broadly. Twitter plunged 14 percent after it reported no growth in users while Amazon fell 1 percent as profit missed expectations. Investors were also assessing other earnings reports, including by Japanese automaker Nissan Motor Co., which reported trading quarterly profit dipped 1 percent on rising costs and slowing growth in China.

ECONOMIC OUTLOOK: Orders for long-lasting U.S. factory goods posted their biggest gain in nearly three years last month. The uptick in orders are a good sign for the U.S. economy, though the figures aren’t as impressive as they first appear because most of the increase comes from a big jump in aircraft orders, which are typically volatile. Looking ahead, markets are expecting the estimate of U.S. second-quarter GDP growth later Friday followed by the latest China and U.S. monthly purchasing managers’ indexes and a U.S. jobs report, all of which the Fed will take into account when deciding on interest rates.

MARKET VIEW: “We’re just in one of those patches where there’s a lot of conflicting signals coming through the markets and we’re stuck in the cross currents,” said Stephen Innes, senior trader at OANDA. “People are really having a tough time coming to grips and obviously the data points are going to be the key pivot points” for market sentiment, he added.

The Washington Post

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes