By Kenan Machado
Technology shares across the Asia-Pacific rose, tracking overnight strength in U.S. tech companies and boosting the region’s equities markets early Tuesday.
Taiwan’s Taiex index closed up 1.2%, with iPhone lens maker Largan Precision /zigman2/quotes/210444196/delayed TW:3008 +0.43% surging 3.8% and fellow Apple suppliers Hon Hai Precision /zigman2/quotes/207256514/delayed TW:2317 +1.98% and Taiwan Semiconductor /zigman2/quotes/207385621/delayed TW:2330 +0.63% gaining 2.6% and 2.9%, respectively. The three stocks make up 26.5% of the benchmark’s weighting, and the gains come as U.S. tech stocks sent the Nasdaq Composite higher for a second straight session on Monday.
In Japan, index heavyweight and tech investor SoftBank /zigman2/quotes/207303954/delayed JP:9984 -3.60% gained 2%, while messaging giant Line /zigman2/quotes/205382025/delayed JP:3938 -0.37% rose 1.4%. The benchmark Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.34% finished up 0.6%, building on Monday’s move past the 20,000-point mark.
A weaker yen against the U.S. dollar also supported the Nikkei, benefiting export-oriented stocks. Hitachi /zigman2/quotes/203839937/delayed JP:6501 -3.78% rose 1.6%, and construction-equipment maker Komatsu /zigman2/quotes/204002437/delayed JP:6301 -1.82% gained 1.2%. The dollar-yen pair /zigman2/quotes/210561789/realtime/sampled USDJPY -0.5320% was last at 114.35, up from 114.06 late Monday.
After recent pullbacks, investors are adding tech stocks to their portfolios at the cost of old-economy stocks, said William Cheung, regional strategy analyst at Kim Eng Securities. However, “they must exercise caution and be selective in picking these stocks,” he said.
In Hong Kong, the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.27% gained 1.5% with tech heavyweight Tencent /zigman2/quotes/204605823/delayed HK:700 +2.87% adding 2.5%. However, the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.60% was down 0.3%, despite a recovery in Chinese metals and coal futures prices.
Weakness began in mainland Chinese markets on Monday after state media reports that the stock market regulator was clamping down on stock buying by fund managers ahead of purchases by their funds.
Outside the tech space, there was caution among traders in Asia ahead of scheduled appearances by U.S. Federal Reserve officials this week. Investors are watching for more cues from the Fed on the pace of interest-rate increases.
“There are no major macro moves, and most of the trading is people moving in and out of sectors,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Fed Gov. Lael Brainard was due to speak in New York on Tuesday, ahead of Chairwoman Janet Yellen’s testimony to congressional committees on Wednesday and Thursday.
Brainard’s speech “is worth mulling over as one of the first Fed views after the data surprise,” said Mizuho Bank analyst Vishnu Varathan, referring to nonfarm-payroll data.
In Asia, analysts say soft inflation data may stay regional central banks’ hands in normalizing interest rates. If the Fed raises rates with Asian central banks unable to do so, regional currencies would move down against the dollar, hurting efforts in the region to move inflation higher, they say.
Elsewhere in the region, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.60% pared early declines to gain 0.1% after ending a three-session losing streak on Monday.