(Bloomberg) — Shares in Asia echoed US losses and the dollar capped gains as the greenback weakened against major currencies. Treasury yields also fell.
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Stocks slipped in Japan, China, Australia and South Korea, while the morning trading session in Hong Kong was canceled due to weather, according to exchange operators.
The decline followed a selloff on Wall Street that hit tech stocks, partly driven by concerns about Apple Inc.’s iPhone sales in China.
The S&P 500 fell 0.3%, while the Nasdaq 100 fell 0.7%. Apple shares slumped 2.9%. US equity futures were trading lower early on Friday. Sentiment in tech stocks was weighed down by the Golden Dragon index of Chinese companies, which fell 4% — one of its worst days this year.
The dollar edged lower but is still set for its longest run of weekly advances in years amid speculation the Federal Reserve will keep interest rates high. Meanwhile, the Japanese yen was marginally firmer after Finance Minister Shunichi Suzuki said Japan would look at FX moves with alacrity and not rule out any options to address excessive moves.
The offshore yuan weakened to a record low. The official daily reference rate for the currency was lower, indicating that policymakers will allow for a gradual depreciation of the currency.
China is planning to extend a ban on the use of iPhones in government-backed agencies and sensitive departments of state companies, in a sign of growing challenges for Apple in its biggest overseas market and global production base.
People familiar with the matter said Beijing intends to broaden that ban to state-owned enterprises and other government-controlled organizations.
“Apple’s growth story is heavily dependent on China, and if Beijing’s action intensifies, it could be a huge blow to other megacap tech companies that rely on China,” said Edward Moya, senior US markets analyst at OANDA. could cause problems.”
Others fear a chilling effect on Apple. According to Amit Daryanani of Evercore ISI, government officials were probably already avoiding the company’s products. A broader crackdown on the company would also affect jobs in China, where most iPhones are assembled, he wrote.
Traders also kept a close eye on the latest US economic data, with solid unemployment claims data strengthening the case for the Fed to keep rates high. Applications for US unemployment benefits fell to their lowest level since February.
After climbing shortly after the report, two-year US yields fell below 5% and continued to trade lower in Asia. Yields on Australian and New Zealand government debt also declined.
Fed Bank of New York President John Williams said US monetary policy is “in good shape” but officials will need to analyze data to decide how to proceed on interest rates. He spoke during a moderated discussion with Bloomberg’s Michael Mackie in New York.
Separately on Thursday, Chicago Fed President Austin Goolsby said on a Marketplace radio program: “We are rapidly approaching a time when we will no longer have an argument about how high rates should be.”
“We’ve seen this movie before,” said Mike Lowengart of Morgan Stanley’s Global Investment Office. “Yes, the economy has slowed and inflation has eased, but employment remains a thorn in the side for the Fed, which has made softening of the jobs market a cornerstone of its inflation battle. The Fed may be ready to leave interest rates unchanged later this month, but they are no closer to retreating from the high long-term stance.
Oil fell for a second day on Friday after nine sessions of gains, pushing futures into the overbought zone, while gold edged higher.
Major events of the week:
Some of the key movements in the markets:
S&P 500 futures were little changed as of 10:57 a.m. Tokyo time. S&P 500 0.3%
Nasdaq 100 futures were little changed. Nasdaq 100 fell 0.7%
Japan’s Topix fell 0.6%
Australia’s S&P/ASX 200 fell 0.4%
Shanghai Composite dropped 0.4%
Euro Stoxx 50 futures rose 0.1%
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.0718
The Japanese yen rose 0.1% to 147.12 per dollar
The offshore yuan fell 0.2% to 7.3547 per dollar
The Australian dollar rose 0.2% to $0.6387
Bitcoin rose 1% to $26,258.75
Ether rose 0.5% to $1,647.21
The yield on 10-year Treasuries declined two basis points to 4.23%
Japan’s 10-year yield declined 1.5 basis points to 0.640%
Australia’s 10-year yield fell six basis points to 4.09%
West Texas Intermediate crude fell 0.5% to $86.40 a barrel
Spot gold rose 0.3% to $1,925.75 an ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Rob Verdonck.
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