Asian shares subdued as tech blues offset US tax cut hopes

A pedestrian looks at an electronics stocks indicator displaying numbers of the Tokyo Stock Exchange in Japan.
A pedestrian looks at an electronics stocks indicator displaying numbers of the Tokyo Stock Exchange in Japan. PHOTO: AFP

TOKYO (REUTERS) - Asian shares were subdued on Tuesday (Dec 5) as investors' rotation out of technology shares took the toll on some of the region's tech heavyweights although hopes of a major tax cut in the United States underpinned risk sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan were capped by the fall in the region's technology shares, with Samsung Electronics losing 1.5 per cent.

Japan's Nikkei fell 0.4 per cent, with semiconductor-related shares such as Tokyo Electron and Shin-etsu Chemical leading the losses.

On Wall Street, the benchmark S&P 500 finished lower on Monday after setting a record intraday high earlier as the technology sector, which has led Wall Street's record-setting rally this year, tumbled 1.9 per cent.

The tech index hit a five-week low and was down 4.3 per cent from its record peak hit a week ago although it still remained the best performer of the year with year-to-date gains of 33 percent.

Investors switched to banks and retailers, which are seen benefitting from the expected corporate tax cuts.

President Donald Trump's goal of slashing taxes on businesses cleared an important hurdle at weekend when the US Senate narrowly approved the Republican's tax overhaul plan.

The S&P 500 banks index surged 2.3 per cent while battered department store shares also jumped.

"Some high-tech shares' valuations are getting stretched. For the entire market to keep rallying, we needed a sector rotation," said Nobuyuki Kashihara, head of research at Asset Management One.

"On the whole, the world's shares are supported by a synchronized growth in the global economy," he added.

The tax cut hopes supported the US dollar in the currency market, particularly against the yen.

The dollar fetched 112.48 yen, after a brief foray to 113.09 on Monday, which was its highest level in more than two weeks.

The euro was steadier at US$1.1866, sitting comfortably in its familiar trading range between US$1.1810-1.1960, as the common currency was helped by hopes the two major German parties will form a grand coalition.

The British pound stood at US$1.3475, off last week's two-month high of US$1.3550, after European Commission President Jean-Claude Juncker and British Prime Minister Theresa May failed to reach an agreement on a divorce deal.

Bitcoin was traded at US$11,571, hovering near its record high of US$11,800 set on Sunday.

Oil steadied after falling more than 1 per cent on Monday on profit-taking as the market eyed signs of rising US production.

But their prices remained close to recent two-year highs thanks to last week's decision by Opec and other producers to extend output cuts.

US West Texas Intermediate futures traded at US$57.50 per barrel, little changed in early Asian trade.