Asian Stocks Gain to Shrug Off US Tech Concerns: Markets Wrap

(Bloomberg) — Asian stocks advanced Tuesday to defy a mixed day on Wall Street as speculation gained that the tech sector rally may be running out of steam.

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Shares in Japan outperformed the region, climbing as much as 1.5%. Contracts for US equities edged higher in Asian trading after various US non-tech sectors advanced on Monday. Meanwhile, Nvidia, the chipmaker at the heart of the artificial-intelligence revolution, extended a three-day rout of about $430 billion — crossing the technical threshold of a correction.

In Asia, investors were seen to be rotating out of the technology sector into other parts of the market. Japanese equities rose as investors snatched up value stocks that have underperformed in recent weeks, including banks. Financial and consumer shares were the largest contributors in the regional MSCI AC Asia Pacific Index.

“As we approach the quarter-end, global investors are rebalancing their portfolio, selling assets that have performed well recently and buying names that have lagged,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management Co. That’s likely to help support the broader Topix index, he said.

Chinese machinery stocks rose after President Xi Jinping urged scientists and researchers to enhance technological innovation with a greater sense of urgency, citing the dominance of other countries in certain key technologies. Meanwhile, Premier Li Qiang warned, in the opening speech for the World Economic Forum, that regressive actions such as supply chain disruption are dragging the world into a destructive spiral.

In other news, the US is investigating China Mobile, China Telecom and China Unicom over concerns the firms could exploit access to American data through their US cloud and internet businesses by providing it to Beijing, Reuters reports, citing three unidentified people familiar with the matter.

Among currencies, the yen strengthened, but still hovered not far from the weakest level in about 34 years. The top currency official had warned that authorities stood ready to intervene if necessary, while some traders see the potential for the yen to slump as far as 170 per dollar. The greenback dipped against most of its Group-of-10 peers as Treasuries steadied in Asian trading.

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Following a tech-led rally, Deutsche Bank’s Binky Chadha said US equities are set to pause. There’s a lot of good news baked into markets, and if that optimism proves unjustified, there could be downside risks, Lori Calvasina at RBC Capital Markets noted. To John Stoltzfus at Oppenheimer, while the bull market appears sustainable, some profit-taking should be expected.

“A decline in the tech sector is certainly possible, even if the sector is going to do well during the summer months overall,” Matt Maley at Miller Tabak noted. “Even if you agree with the most-bullish scenario for the AI phenomenon for the second half of 2024, no group moves in a straight line.”

In commodities, oil held gains as investors weighed the potential fallout from rising geopolitical tensions. Gold was edged lower after closing higher in the previous session on a weaker US dollar, which boosted the appeal of commodities.

Bitcoin rebounded after plunging 6.6% on Monday. Losses are piling up in the crypto market after its second-worst weekly decline of 2024, a reflection of cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.

Key events this week:

• US Conference Board consumer confidence, Tuesday

• Fed’s Lisa Cook, Michelle Bowman speak, Tuesday

• US new home sales, Wednesday

• China industrial profits, Thursday

• Eurozone economic confidence, consumer confidence, Thursday

• US durable goods, initial jobless claims, GDP, Thursday

• Nike releases earnings, Thursday

• Japan Tokyo CPI, unemployment, industrial production, Friday

• US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday

• Fed’s Thomas Barkin speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 12:17 p.m. Tokyo time

• Nikkei 225 futures (OSE) rose 0.7%

• Japan’s Topix rose 1.4%

• Australia’s S&P/ASX 200 rose 0.9%

• Hong Kong’s Hang Seng rose 0.3%

• The Shanghai Composite fell 0.4%

• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0739

• The Japanese yen rose 0.2% to 159.35 per dollar

• The offshore yuan was little changed at 7.2784 per dollar

• The Australian dollar was little changed at $0.6663

Cryptocurrencies

• Bitcoin rose 2.8% to $61,119.01

• Ether rose 1.9% to $3,371.92

Bonds

• The yield on 10-year Treasuries was little changed at 4.23%

• Japan’s 10-year yield advanced one basis point to 0.995%

• Australia’s 10-year yield declined two basis points to 4.20%

Commodities

• West Texas Intermediate crude was little changed

• Spot gold fell 0.3% to $2,327.72 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Toshiro Hasegawa.

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