(Bloomberg) — European equity futures declined alongside Asian stocks Thursday as investors began pulling back on the artificial-intelligence frenzy that has powered the bull market this year. The yen rose for a fourth day ahead of next week’s Bank of Japan meeting.
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Contracts for the Euro Stoxx 50 slid 0.6% as the MSCI Asia Pacific Index dropped by the most in more than three months. Japan’s Nikkei 225 Stock Average headed for a technical correction, while South Korea’s benchmark lost nearly 2% with chipmaker SK Hynix Inc. tumbling despite an earnings beat. US stock index futures climbed after the S&P 500 slumped 2.3%.
“There seems to be a broad reassessment on the cost and benefit calculus for the artificial intelligence ecosystem,” said Homin Lee, senior macro strategist at Lombard Odier Singapore Ltd. “Anxieties about consumer demand also persist due to hints of softening data in the US. These worries could prove temporary in the end, but a collective reappraisal by investors is natural after such a furious rally.”
Investors are watching US GDP and initial jobless claims data, due to be released later Thursday, for further evidence of the economy’s health.
The yen climbed as much as 1.1% against the dollar. The Japanese currency is trading at the strongest levels relative to the greenback since May as traders start positioning for a potential policy rate hike by the BOJ.
“Unease among yen bears is deepening with Japanese monetary policy possibly tightening next week, in contrast to coming rate cuts by the Federal Reserve and the European Central Bank,” said Wei Liang Chang, macro strategist at DBS Bank Ltd. “Further yen strength into the BOJ meeting next week cannot be discounted.”
Former New York Fed President William Dudley called for lower borrowing costs — preferably at next week’s gathering. For many analysts, such a move would be worrisome as it would indicate officials rushing to avoid a recession.
In Asia, the People’s Bank of China cut its medium-term lending facility rate to 2.3% from 2.5% on…
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