Tech­nol­ogy sell-offs send Asia mar­kets into re­verse

Kuwait Times - - BUSINESS -

Asian mar­kets re­versed early gains yes­ter­day to sit mostly down in the af­ter­noon as a sell-off in tech­nol­ogy shares over­shad­owed a record close on Wall Street and a rally in en­ergy firms. Af­ter surg­ing on years of low bor­row­ing costs, the tech sec­tor is suf­fer­ing sell­ing pres­sure from profit-tak­ing around the world and in­creas­ing talk among cen­tral banks that the age of cheap money is com­ing to an end.

With big-name firms such as Ap­ple and Google par­ent Al­pha­bet suf­fer­ing in re­cent weeks, their Asian coun­ter­parts are also feel­ing the pinch. In Hong Kong in­ter­net gi­ant Ten­cent sank more than four and speak­er­maker AAC Tech­nolo­gies dived 2.4 per­cent, while Tokyo-listed Sony lost 1.7 per­cent and Sharp dived 1.9 per­cent. Sam­sung Elec­tron­ics re­treated 0.5 per­cent in Seoul.

And those fed through to broader mar­kets, while traders have also been spooked by news that North Korea had tested its first mis­sile that could reach the United States. Tokyo ended down 0.1 per­cent, Seoul slipped 0.6 per­cent and Sin­ga­pore gave back 0.5 per­cent and Taipei 0.6 per­cent. Shang­hai was off 0.4 per­cent. Hong Kong plunged 1.5 per­cent, with Kenny Wen, a strate­gist at Sun Hung Kai Fi­nan­cial in Hong Kong, telling Bloomberg News: “Many in­vestors were bet­ting 25,500 was the sup­port­ing level for the Hang Seng In­dex and have bought lots of fu­tures on it.

“As the in­dex fell be­low that level this morn­ing, some peo­ple got pan­icked and chose to sell their hold­ings.” How­ever, Syd­ney ended 1.8 per­cent higher af­ter a more than two per­cent dive in the pre­vi­ous two days and as Aus­tralia’s cen­tral bank held off rais­ing in­ter­est rates. The losses came de­spite a pos­i­tive lead from Wall Street where the Dow chalked up an­other record high ahead of In­de­pen­dence Day cel­e­bra­tions.

En­ergy rally

Mar­kets re­versed early gains that were led by en­ergy firms as oil prices bounced. Crude lost around a fifth of its value be­tween midMay and mid-June, hit­ting 10-month lows, as traders fret­ted that a pick-up in US out­put was off­set­ting cuts by OPEC and Rus­sia. But it has re­cov­ered around half of those losses in re­cent weeks as US firms have cut the num­ber of rigs pump­ing, eas­ing sup­ply glut wor­ries. While both main con­tracts dipped on Tues­day, re­gional en­ergy firms tracked the pre­vi­ous day’s gains of around two per­cent on the oil mar­ket.

PetroChina and CNOOC surged in Hong Kong, while Tokyo-listed In­pex was more than one per­cent up. How­ever, re­finer Idemitsu Kosan plunged more than 11 per­cent in Ja­pan af­ter say­ing it plans to raise up to $1.2 bil­lion in a share sale de­spite op­po­si­tion from its found­ing fam­ily to a merger with ri­val Showa Shell Sekiyu KK Showa Shell soared more than seven per­cent. In Syd­ney, Wood­side Pe­tro­leum and Rio Tinto jumped.

The dol­lar held up af­ter bounc­ing Mon­day from last week’s sharp losses thanks to up­beat fac­tory fig­ures. An­a­lysts also sug­gested cen­tral banks were step­ping back from hawk­ish com­ments in­di­cat­ing mon­e­tary tight­en­ing. The pound was weighed by be­low-fore­cast man­u­fac­tur­ing data while Euro­pean Cen­tral Bank of­fi­cials looked to tem­per boss Mario Draghi’s sug­ges­tion of higher in­ter­est rates. “We’ve seen an ag­gres­sive pull­back from last week’s spec­u­la­tive bets fu­elled by the hawk­ish cho­rus of cen­tral bankers,” said Stephen Innes, se­nior trader at OANDA.

How­ever, the green­back fell against the yen fol­low­ing North Korea’s mis­sile test, the lat­est provo­ca­tion to ratchet up ten­sions over its nu­clear weapons am­bi­tions. In­vestors are await­ing the re­lease Wed­nes­day of min­utes from the Fed­eral Re­serve’s June pol­icy meet­ing and key US jobs data Fri­day. In early Euro­pean trade Lon­don fell 0.4 per­cent while Paris and Frank­furt each shed 0.3 per­cent. —AFP

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