Login ID:
Password:
Partner Login
Contact Us : 7066511911

Asian Shares Held Back by Tech Stocks -- Update

14 Jun 2017 4:48 am
By Ese Erheriene 

Stock markets struggled to find direction in Asia on Wednesday, as technology stocks dialed back early gains amid investor caution ahead of the U.S. Federal Reserve's decision on interest rates.

Korea's Kospi IT subindex reversed from early gains to trade down 0.2% at midday, with heavily weighted Samsung turning negative. The benchmark Taiex in Taiwan was recently 0.6% lower, after notching gains early in the session.

In Japan, electronics stocks pulled back but remained broadly stronger, outpacing the Nikkei Stock Average's 0.2% rise.

The reversal midmorning Wednesday came after a brief reprieve Tuesday, following steep declines among key technology names on Friday and Monday. These declines were triggered by investor concerns about stock valuations given the sector's winning streak since the start of the year.

"A repeat of the sell-off cannot be ruled out with the high valuations likely registering itself as a more prominent cause for concern," said Jingyi Pan, a market strategist at IG Group.

Elsewhere, Australia's S&P/ASX 200 was last up 1%, buoyed by strength in banking and materials stocks, while the Hang Seng Index was off 0.3% at the midday break.

In China, stocks were lower amid market concerns for heightened Chinese regulatory scrutiny after media reports that the chairman of high-profile Chinese financial firm Anbang Insurance Group was taken away in recent days by Chinese authorities.

Late Tuesday, Anbang said its chairman, Wu Xiaohui, can't perform his duties temporarily and has turned them over to other executives. A company spokesman declined Wednesday to provide comment beyond the statement.

The Shanghai Composite Index was 0.6% lower, with over 600 stocks in decline. Stocks in which Anbang has significant stakes tumbled in Shanghai. China State Construction Engineering Corp., developer Gemdale Corp. and Poly Real Estate Group Co. fell 3%, 3.4% and 2.8%, respectively. The Shenzhen main board edged down 0.1%.

"The news will have short-term impact on the individual stocks, but since the rumor has been swirling around for some time, some shares have already been hit and further downward space is limited," said Jacky Zhang, an analyst at BOC International.

Market attention will soon turn to the U.S. Federal Open Market Committee's decision on interest rates later in the global day. According to CME Group data, almost all market participants believe the Fed will raise interest rates, which is typically good for bank margins.

Still, the upward regional momentum was limited by investor caution ahead of the Fed's decision.

"We anticipate that the statement will be altered to indicate that the FOMC will begin to reduce the balance sheet later this year if conditions evolve as expected," said Société Générale, which expects the Fed to raise the funds rate by a quarter of a percentage point to a range of 1.00%-1.25%.

Meanwhile, in currencies, the U.S. dollar was roughly flat against the yen, with the dollar last at Yen110.03. Still, record-high levels for U.S. stocks and the recent weakening of the greenback--especially against the euro--could allow Fed officials to keep tightening at a steady pace, ultimately a positive for long-term dollar strength.

In commodities, oil futures extended the late-U. S. selloff in early Asian trading as investor worries about surplus inventories persisted. Nymex oil futures were recently down 1% in Asia at $46.02 a barrel, while Brent was off 0.8% at $48.32.

In the U.S., the Dow Jones Industrial Average added 0.4%, the S&P 500 gained 0.5% and the Nasdaq Composite rose 0.7%.

Yifan Xie

and Kosaku Narioka contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com
 

(END) Dow Jones Newswires

June 14, 2017 00:48 ET (04:48 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
Disclaimer
Top 5 Special Reports
Weekly: ICE Raw Sugar Loses Over 7% As Net Shorts Nearl...
Weekly: Downward Pressure Continues In ICE Cotton As Ne...
USD/INR (Apr. 20) Inflection Point: Testing a Short-...
USD/INR (Apr. 20) Pullback Underway / Testing a Shor...
USD/MYR