June 16, 2017
By Nichola Saminather
SINGAPORE (Reuters) – Asian stocks were steady on Friday, 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 <.MIAPJ0000PUS> 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 <.AAPL.O> and Alphabet
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 on Friday.
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 <.DXY>, which tracks the greenback against a basket of trade-weighted peers, inched up almost 0.1 percent, extending Thursday’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
“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.
In commodities, oil was lower on continued worries over rising U.S. gasoline inventories adding to already elevated global supply.
Global benchmark Brent
(Reporting by Nichola Saminather; Editing by Shri Navaratnam)
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