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Asia stocks steady after Wall St tech rout, dollar holds gains

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Written by Syndicated News
SINGAPORE, June 16 2017 : Asian stocks were steady today, appearing to take in stride the resumption of the U.S. technology rout overnight, while the dollar held near a two-week high after solid economic data backed the case for tighter U.S. monetary policy.

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, on track to end the week down 0.7 percent.

Japan’s Nikkei .N225 jumped 0.5 percent, narrowing its loss for the week to 0.4 percent.

Overnight, the Nasdaq .IXIC led losses on Wall Street with a 0.5 percent drop, dragged lower by shares including Apple and Alphabet (GOOGL.O) that tumbled on bearish analysts’ reports. The S&P 500 technology index 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.

“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,” Naeem Aslam, chief market analyst at ThinkMarkets in London, wrote in a note.

“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 shook off the U.S. woes to inch higher, with the biggest company, Samsung Electronics (005930.KS) jumping 0.5 percent early today.

The second biggest firm, semiconductor concern SK Hynix (000660.KS), climbed 1.5 percent to a 15-year high.

Analysts have attributed the outperformance of Asian technology company shares to their lower valuations relative to U.S. peers.

In currencies, the dollar remained near a two-week high hit overnight after data showed the number of Americans filing for unemployment fell more than expected last week.

A better-than-expected business conditions survey for June also bolstered the case for Fed tightening this year.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, inched up almost 0.1 percent, extending yesterday’s 0.5 percent gain. It’s on track for a 0.2 percent rise this week.

The dollar was also marginally higher at 110.98 yen JPY=D4, adding to yesterday’s 1.2 percent jump, poised to end the week 0.6 percent higher.

“There is certainly an elevated risk (USD outperformance) materializes and if trading is, by and large, a play on probability I would be looking at USD longs with increased convictions,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

“Of course, today’s Bank of Japan meeting (no set time) poses a risk, but little is expected in the way of catalysts, although we have seen some commentary of late from BoJ members and a focus on its ‘exit strategy’.”

The Bank of Japan is expected to leave monetary policy unchanged and signal confidence in a strengthening economy, as a tightening job market and solid global demand support a view that a recovery is gaining momentum.

Sterling GBP= added 0.1 percent to $1.277.  Yesterday, it jumped to as high as $1.28 on signs of a shift in the Bank of England’s stance on keeping interest rates at record lows, but fell back to close flat.

In commodities, oil was lower on continued worries over rising U.S. gasoline inventories adding to already elevated global supply.

U.S. crude fell 0.1 percent to $44.39 a barrel, remaining near yesterday’s six-week low, on track for a 3.1 percent drop for the week.

Global benchmark Brent also slipped 0.1 percent to $46.86, set to end the week 2.7 percent lower.

Gold crept higher following yesterday’s 0.6 percent drop on the dollar’s strength. It was marginally higher at $1,254.25 an ounce early today, but still poised to close the week with a 0.9 percent loss. – Reuters

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