Asian Stocks Drop as Earnings Eyed; Dollar Gains

Stocks in Asia slid following a sluggish US session, with investors seeking firm evidence of an earnings recovery before taking this month’s rally further. The dollar gained. Bloomberg reported.

Japanese equities underperformed, as Nintendo tumbled on a weak outlook and Toyota Motor’s profit forecast disappointed. A recent rally in Hong Kong and mainland Chinese shares halted as investors looked ahead to a slew of major tech earnings due next week.

The dollar advanced for a third session as Treasury yields inched higher. Federal Reserve Bank of Minneapolis President Neel Kashkari said it’s likely the central bank will keep rates where they are “for an extended period of time.” The yen extended losses despite warnings from the central bank governor.

“We’re seeing some consolidation in Asia equities today after a lackluster Wall Street session,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. “The US dollar is gaining ground, and the impact of Tokyo’s suspected interventions last week is fast dissipating as the yen’s large yield disadvantage comes back to the fore.”

Bank of Japan Governor Kazuo Ueda fired a clear warning shot to financial markets about a potential policy move as he beefed up his language on the weak yen. Finance Minister Shunichi Suzuki said the government stands ready to take all possible measures as needed.