HONG KONG: Tech firms bounced back in Asia on Tuesday (Jun 30), tracking a rebound in their counterparts on Wall Street following the hefty selling of the past two weeks, while the yen held around a four-decade low against the dollar.
With optimism that the US-Iran crisis will eventually come to an end and the Strait of Hormuz will reopen, attention has returned to central bank monetary policy and the future of the AI boom.
The tech sector – which has led a global rally across markets and pushed several companies to record highs – has taken a pummelling of late on fears over stretched valuations, interest rates and when traders will see returns on their investments.
But a rush to pick up bargains following that selloff fuelled a spike in New York, where the Dow hit a fresh peak and the Nasdaq climbed more than 2 per cent.
That came thanks to strong finishes for Magnificent Seven plays, including Amazon, Meta and Nvidia.
“After last week’s record selling in big tech, buyers returned to the same names they were throwing overboard only days earlier,” said SPI Asset Management’s Stephen Innes.
“That does not mean the AI trade has suddenly been cured. It means the patient stopped bleeding long enough for the surgeons to begin bidding the stock back up.
“For Asia, and especially Korea and Japan, that is the handoff.”
After a shaky start, Asian investors pushed tech companies higher, with Seoul’s Kospi – the best-performing benchmark this year – climbing 1 per cent but still well down from its recent record high touched before last week’s rout.
Tokyo and Taipei were also sharply higher, while Shanghai, Wellington and Bangkok enjoyed buying interest.
Among the best-performing firms, South Korean chip giant Samsung and Japan’s Tokyo Electron added more than 3 per cent, while TSMC advanced more than 1 per cent in Taipei.
However, Hong Kong, Sydney, Singapore, Manila, Mumbai and Jakarta fell.
London, Paris and Frankfurt all advanced.
Traders were keeping an eye on Tokyo amid speculation the government could intervene in currency markets after the yen hit its weakest level against the dollar since 1986.
The unit hit as much as 162.40 per dollar amid expectations that the Federal Reserve will lift interest rates this year.
The moves come ahead of US jobs data Thursday, with analysts warning a stronger-than-expected reading could fan bets on a US hike sooner than later.
An increase in borrowing costs to a 31-year high by the Bank of Japan this month did little to support the yen, with government officials’ warnings of an intervention also falling short.
Finance Minister Satsuki Katayama was reported by local media as saying Tuesday that Tokyo “will take appropriate action at any time as necessary”.
The government spent a record US$72.4 billion to support the unit between Apr 28 and May 27 after it first slid past 160 per dollar.
“A major catalyst behind the dollar’s move has been the arrival of new Federal Reserve Chair Kevin Warsh, whose public comments have been interpreted as notably more hawkish” than US President Donald Trump might have wished, said IG’s Axel Rudolph.
“Warsh has repeatedly stressed the importance of maintaining the Fed’s inflation-fighting credibility and has signalled a willingness to keep policy restrictive if price pressures prove persistent. Markets have taken those signals seriously, with Treasury yields rising sharply in response.
“The prospect of higher US interest rates has widened the expected policy gap between the United States and many of its major trading partners, increasing demand for dollar-denominated assets.”
Oil prices edged down on easing concerns over Middle East peace talks after the United States and Iran exchanged fire at the weekend.
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