Asia stocks shake off US tech slump, loonie jumps on rate hike prospect

A businessman looks at an electronic share indicator in Tokyo on April 24, 2017.
A businessman looks at an electronic share indicator in Tokyo on April 24, 2017. PHOTO: AFP

SINGAPORE (REUTERS) - Asian stocks crept higher on Tuesday (June 13), defying a weak lead from Wall Street, which was dragged lower by technology stocks for a second day, while the Canadian dollar soared on the possibility interest rates might go up sooner than expected.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent in early trade.

Japan's Nikkei slipped 0.3 per cent. South Korea's KOSPI gained 0.3 per cent, with the biggest stock Samsung Electronics flat after Monday's 1.6 per cent slump. Naver Corp. and LG Innotek, which led Asian losses on Monday, also recovered.

Singapore shares also opened higher on Tuesday, with the benchmark Straits Times Index at 3,255.25 in early trade, up 0.21 per cent, or 6.91 points.

On Wall Street, tech giants including Apple, Alphabet, Facebook and Microsoft continued to be sold off for the second consecutive day.

That dragged the Nasdaq down 0.5 per cent, the S&P 500 0.1 per cent and the Dow Jones Industrial Average 0.2 per cent. "I don't sit in the camp that we will see a prolonged pullback in US tech, but there is a good chance this hot sector now underperforms and I had been suggesting increasing exposure to US financials as a trade," Mr Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

In currencies, the Canadian dollar held on to Monday's strong gains, after a Bank of Canada official said the central bank would assess if it needs to keep interest rates at near-record lows as the economy grows. That was a change in tone for the central bank, which said earlier this year that rate cuts remain on the table.

The so-called loonie strengthened about 0.1 per cent to trade at C$1.33 to the dollar, extending Monday's 1.1 per cent gain. "It feels like a long time since markets have been treated to unscheduled hints of tightening, and this was quite apparent when you saw the positive reaction of CAD crosses overnight," Mr Matt Simpson, senior market analyst at ThinkMarkets in Melbourne, wrote in a note.

The US dollar failed to make up losses against the yen ahead of a widely expected interest rate increase by the US Federal Reserve this week. It was flat at 109.95 yen, after falling 0.4 per cent on Monday.

In commodities, oil advanced on signs of inventory declines in the United States and news that Saudi Arabia would limit volumes of crude to some Asian buyers in July and deepen cuts to the US market. US crude rose 0.3 per cent to US$46.19 a barrel. Global benchmark Brent added 0.2 per cent to US$48.41.