Equity-index futures for Japan, Hong Kong and mainland China all fell after the tech-heavy Nasdaq 100 Index dropped 1.1% on Wednesday. The S&P 500 closed 0.5% lower due to losses in the tech megacaps, even as a majority of companies rose. Contracts for US stocks slipped 0.2% in early Asian trading. Australian shares opened higher.
Oil fell for the first time in six days after President Donald Trump said he’d been assured Iran would stop killing protesters, in a sign he may hold off on a threatened military response to the repression of demonstrations in the nation. West Texas Intermediate fell 1.7% Thursday. Elsewhere, gains in Treasuries pushed the 30-year yield to the lowest level this year.
Asian shares have outpaced gains on Wall Street this year on relatively cheaper valuations and optimism over the artificial-intelligence trade. In contrast, the first weeks of the year in the US have been marked by a rotation out of giant tech companies, whose all-weather earnings made them safe bets at times of economic uncertainty.
“This is a demonstration of what occurs when rotation affects the stocks that dominate key indexes,” Steve Sosnick, chief strategist at Interactive Brokers, wrote in a note.
Meanwhile, the US Supreme Court didn’t rule on challenges to Trump’s tariffs Wednesday, leaving the world to wait until at least next week to learn the fate of his signature economic policy.
In Asia, the South Korean won is in focus after US Treasury Secretary Scott Bessent referred to excessive declines in the currency, offering rare verbal support as the won slides toward its weakest since 2009. “Bessent’s comments can support the won in the near term, but markets may have more influence if they feel the fundamentals and politics are still in a worsening trajectory,” said Brendan McKenna, a strategist at Wells Fargo in New York.
Attention will also be on Japan, where Prime Minister Sanae Takaichi will call a snap election early in the parliamentary session starting later this month. Equities in the country have jumped and the yen has come under pressure amid reports of a snap poll.
The yen was a touch higher against the dollar on Thursday after Bessent spoke with Japanese Finance Minister Satsuki Katayama and noted the “inherent undesirability of excess exchange rate volatility.”
In the US on Wednesday, as earnings rolled in, Wells Fargo & Co. sank after missing profit estimates while concern about Bank of America Corp.’s expense outlook offset solid results. Citigroup Inc. slipped as top executives reined in analyst exuberance about the bank racing toward the finish line on key regulatory requirements and reducing its expenses.
“The expectations for this earnings season are very high,” said Matt Maley at Miller Tabak. “If those expectations are not met in today’s stock market — which is priced for perfection — it’s going to create some headwinds.”
While the S&P 500 fell amid a slide in all “Magnificent Seven” shares, more than 300 of its firms actually rose. Small caps continued to outperform, with the Russell 2000 beating the S&P 500 for a ninth straight session — matching the longest streak since 1990.
On the macro front, US retail sales rose in November by the most since July, fueled by a rebound in auto purchases and resilient holiday shopping. Wholesale inflation picked up slightly on a jump in energy costs, even as prices for services were unchanged.