Asia stocks shake off US tech slump, loonie jumps on rate hike prospect

13 Jun, 2017 10:11 am

SINGAPORE – Asian stocks mostly rebounded on Tuesday despite a further slide in US tech shares, while the Canadian dollar soared on the possibility interest rates might go up sooner than expected.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 percent, recouping about half of the previous session’s losses as regional tech shares regained their composure.

The MSCI Asia Pacific Information Technology index steadied, after sliding 1.4 percent on Monday. Some analysts had predicted Asian tech shares would not see as intense a selloff as their US peers as their valuations were less stretched.

Japan’s Nikkei slipped 0.1 percent. “The view that some US tech shares are going through inevitable adjustments while retaining a positive outlook is also lessening the impact on the domestic market,” said Hitoshi Ishiyama, chief strategist at Sumitomo Mitsui Asset Management in Japan.

South Korea’s KOSPI gained 0.4 percent, with the biggest stock Samsung Electronics up 0.5 percent after Monday’s 1.6 percent slump. Naver Corp. and LG Innotek, which led Asian losses on Monday, were flat and 1.3 percent higher, respectively.

Taiwan’s tech-heavy benchmark index added 0.2 percent, with the biggest company, Taiwan Semiconductor Manufacturing Co. little changed. Major Apple supplier Hon Hai Precision Industry slipped 0.5 percent, but that was a moderation from Monday’s 2.9 percent slump. Hong Kong’s Hang Seng gained 0.3 percent but Chinese shares lost 0.3 percent.

On Wall Street, tech giants including Apple, Alphabet, Facebook and Microsoft were sold for the second consecutive day on Monday. That dragged the Nasdaq down 0.5 percent, the S&P 500 0.1 percent and the Dow Jones Industrial Average 0.2 percent.

“I don’t sit in the camp that we will see a prolonged pullback in US tech, but there is a good chance this hot sector now underperforms and I had been suggesting increasing exposure to US financials as a trade,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

In currencies, the Canadian dollar extended Monday’s strong gains, after a Bank of Canada official said the central bank would assess if it needs to keep interest rates at near-record lows as the economy grows. That was a change in tone for the central bank, which said earlier this year that rate cuts remain on the table.

The “loonie” strengthened about 0.4 percent to trade at C$1.328 to the dollar, a two-month high, after gaining 1.1 percent on Monday. “It feels like a long time since markets have been treated to unscheduled hints of tightening, and this was quite apparent when you saw the positive reaction of CAD crosses overnight,” Matt Simpson, senior market analyst at ThinkMarkets in Melbourne, wrote in a note.

The dollar inched higher to 110 yen, after falling 0.3 percent on Monday, ahead of a widely expected interest rate increase by the US Federal Reserve this week. The Bank of Japan, which is also meeting this week, is expected to keep its monetary policy unchanged.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, crept up slightly to 97.189. Sterling was fractionally lower at $1.265 ahead of a Bank of England meeting at which the benchmark rate is expected to remain at 0.25 percent.

The euro slipped slightly to $1.1198. In commodities, oil advanced on news that Saudi Arabia would make supply cuts to customers. US crude rose 0.4 percent to $46.24 a barrel. Global benchmark Brent also added 0.4 percent to $48.46. -Reuters

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