Asia stocks stable after U.S. tech scatter overnight
Asian stocks stabilized on Friday, taking in pace the resumption of the U.S. technology scatter overnight, and European shares look set for a positive start following Thursday’s losses.
The Japanese yen remained near a two-week down against the dollar after the Bank of Japan left monetary policy unchanged as expected even as its U.S. counterpart signaled further secured.
It kept its short-term interest rate target at minus 0.1 percent and its 10-year government bond yield target at around zero percent as it traded at 0.3 percent lower at 111.23 yen JPY=D4 per dollar after the BOJ left in place its program to buy Japanese government bonds.
As expected, the central bank offered a more benefit view on private utilization and overseas economies, signaling its confidence that the recovery was gaining strength.
Japan’s Nikkei .N225 advanced 0.7 percent, narrowing its loss for the week to 0.3 percent.
Global market strategist at JPMorgan Asset Management, Yoshinori Shigemi said,
“The market was relieved that there was no mention of an exit strategy, at least for now.”
On track to end the week down 0.85 percent, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped about 0.1 percent.
Financial spreadbetters expect Britain’s FTSE 100 .FTSE, Germany’s DAX .GDAXI and France’s CAC 40 .FCHI to all open up about 0.2 percent.
Overnight, the Nasdaq .IXIC led losses on Wall Street with a 0.5 percent drop, hauled lower by shares including Apple .AAPL.O and Alphabet (GOOGL.O) that scrambled on bearish analysts’ reports. The S&P 500 technology index .SPLRCT also declined 0.5 percent.
The broader S&P 500 index .SPX fell 0.2 percent and the Dow Jones Industrial Average .DJI slipped 0.1 percent.
Chief market analyst at ThinkMarkets in London, Naeem Aslam wrote in a note, “It was a brutal day for the tech sector once again as investors are increasingly more worried about the (Federal Reserve) tightening cycle and how that would put a number of firms in trouble.”
He further added, “The tech boom has been on the back of easy money and lower interest rates. Both of them are leaving town.”
South Korea’s KOSPI .KS11 slipped about 0.1 percent, surrendering early gains. The biggest company, Samsung Electronics (005930.KS) added 0.1 percent.
The second biggest firm, semiconductor concern SK Hynix (000660.KS), hit a 15-year high before lowering back to trade 0.2 percent lower.
The technology-heavy Taiwan index .TWII spread gains to 0.6 percent, with the biggest company, Taiwan Semiconductor Manufacturing Co. (2330.TW) jumping 1.7 percent and Apple supplier Hon Hai Precision Industry (2317.TW) surging 2.5 percent.
Global macro strategist at Saxo Capital Markets in Singapore, Kay Van-Petersen said,” This is long overdue, there’s a clear discrepancy, where Asia and emerging market tech names are still being discounted compared to their western counterparts.”
He further added, “Historically that made sense, but politically, things are potentially a lot more stable in Asia than in developed markets as a whole.”
The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, climbed to a two-week high.
Data overnight showing the number of Americans filing for unemployment diminished more than expected last week, and better-than-expected business conditions in June supported the case for Federal Reserve tightening this year.
The index rose 0.1 percent to 97.539, extending Thursday’s 0.5 percent gain. It’s on track for a 0.3 percent rise this week.
On Wednesday, the Fed raised interest rates as commanly expected, and also released some preliminary details of its plan to start paring its $4 trillion-plus debt holdings.
Sterling GBP=D3 added almost 0.1 percent to $1.2769. On Thursday, it jumped to as high as $1.2795 on signs of a shift in the Bank of England’s stance on keeping interest rates at record lows.
But it fell back to close flat, as monetary policy uncertainty added to existing involvement about Britain’s political outlook after Prime Minister Theresa May failed to win a parliamentary majority in last week’s election.
In commodities, oil was subdued on continued worries over rising U.S. gasoline inventories adding to already elevated global supply.
U.S. crude CLc1 fell 0.1 percent to $44.49 a barrel, remaining near Thursday’s six-week low, on track for a 2.9 percent drop for the week.
Set to end the week 2.45 percent lower, Global benchmark Brent LCOc1 crept up 0.1 percent to $46.97.
The dollar’s strength kept gold XAU= flat at $1,252.92 an ounce, failing to make up Thursday’s 0.6 percent drop. It is assured to close the week with a 1 percent loss, its second weekly decline.
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