Asian Equity Markets Drop After Meta Platforms Inc. Disappointing Outlook
Asian equity markets took a hit after Meta Platforms Inc., the parent company of Facebook, reported a disappointing outlook that raised concerns about the sustainability of the bull market in equities. Equity benchmarks in Japan and South Korea dropped, while futures for Hong Kong also declined. Australian financial markets were closed for a holiday.
The yen traded in a narrow range after weakening beyond 155 per dollar for the first time in more than three decades, heightening the chances of intervention. A $250 billion exchange-traded fund tracking the Nasdaq 100 also took a hit after Meta Platforms tumbled more than 15% following its projection of second-quarter sales below analyst expectations and increased spending estimates for the year.
Analysts expressed concerns about Meta’s spending plans, with Sophie Lund-Yates from Hargreaves Lansdown Plc stating, “Meta’s resources are vast, but not infinite. The language around spending plans has become bolder once more, and this could be what’s spooking markets.”
In Japan, the yen depreciated to as low as 155.37 per dollar, marking the first time since June 1990 that the currency had crossed the 155 level. Traders are now watching for any comments from officials in Tokyo that suggest a higher state of readiness for intervention.
Meanwhile, South Korea’s SK Hynix Inc. expressed optimism about a full recovery in the memory market after AI demand boosted the chipmaker’s revenue expansion.
In the broader markets, oil held a modest decline, with a risk-off tone countering a drawdown in US stockpiles, while gold remained little changed.
The earnings report from Meta Platforms showed revenue of $36.5 billion in the first quarter, with profit more than doubling to $12.4 billion. Tejas Dessai at Global X ETFs encouraged investors to focus on the company’s strengths, while Mark Hackett at Nationwide noted that the advantage of tech megacaps like Meta Platforms could decrease in the coming years.
Traders are closely watching economic data that will shape the Federal Reserve’s next steps, with economists predicting GDP likely cooled to around 2.5% in the first quarter, potentially indicating persistent inflationary pressures.
Key events to watch this week include US GDP, wholesale inventories, initial jobless claims, earnings reports from Microsoft, Alphabet, and Airbus, as well as Japan’s rate decision and economic forecasts.
Overall, the market sentiment remains cautious as investors navigate the impact of Meta Platforms’ disappointing outlook on the broader equity markets.
