Asian Stocks Shake Off U.S. Tech Slump; ‘Loonie’ Jumps on Rate-Hike Prospect

SINGAPORE (Reuters) —
A currency trader works at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. (AP Photo/Ahn Young-joon)

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

European stocks markets were also poised to recover from Monday’s sell-off, with financial spreadbetter CMC Markets expecting Britain’s FTSE to open 0.4 percent higher, Germany’s DAX to rise 0.2 percent and France’s CAC 40 to start the day up 0.1 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 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 U.S. peers as their valuations were less stretched.

“Comparatively, valuations for the IT sector in the Asia-Pacific region are less expensive compared to the U.S., which may be why we’re not seeing the situation further aggravate for a second session,” said Jingyi Pan, market strategist at IG in Singapore.

“Moreover, we have also seen the market buying into the sector following the initial drop on the S&P 500 index in Monday’s session. This shows that there remains market interest in this sector, which has outperformed in terms of Q1 earnings.”

Japan’s Nikkei slipped 0.1 percent.

South Korea’s KOSPI gained 0.5 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 0.3 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 0.4 percent and Chinese shares climbed 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.

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,” which hit a two-month high during the session, strengthened about 0.25 percent to trade at C$1.329, 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 Federal Reserve this week.

A small majority of traders in China’s financial markets think its central bank will likely raise short-term interest rates again this week if the Federal Reserve hikes its key policy rate, according o a Reuters poll.

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, rose 0.1 percent to 97.219.

Sterling was fractionally lower at $1.266 ahead of a Bank of England meeting on Thursday at which the benchmark rate is expected to remain at 0.25 percent.

The euro slipped 0.1 percent to $1.1193.

In commodities, oil advanced on news that Saudi Arabia would make supply cuts to customers.

U.S. crude rose 0.5 percent to $46.32 a barrel.

Global benchmark Brent also added 0.5 percent to $48.56.

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