Hong Kong- Most Asian share markets dropped on Tuesday. Japan’s Nikkei
average closed at a fresh 11-month low, while weakness in tech shares
dragged South Korea’s KOSPI to a fresh low for the year.
European stock markets were expected to mimic their Asian counterparts,
treading cautiously following sharp losses on Monday in the once-favoured
TMT (technology, media and telecommunications) sector.
Analysts said weak Asian sentiment would likely persist in the near term as
markets ponder the outlook for U.S. interest rates.
“I think before regional sentiment can turn around, we need to see more
comfort by investors on what the Fed is going to do,” said Rebecca
Patterson, Asian markets strategist for J.P. Morgan in Singapore.
She said U.S. indicators including average hourly earnings and payrolls, due
next month, might shed light on the outcome of a June meeting of the
policy-setting Federal Open Market Committee.
Tokyo’s Nikkei average slipped 0.41 percent to end at 16,318.73. Investors
unloaded big-name technology stocks like Softbank and Sony Corp, mirroring a
technology selloff in the United States which pushed the Nasdaq down 0.77
percent to 3,364.21.
The Nasdaq at one stage dropped as low as 3,172.65, a new low for the year
before rallying back in the final hour.
The Dow Jones industrial average lost 0.79 percent.
The Nikkei is now heavily oversold with a reading of about 20 on the 14-day
Relative Strength Index. The benchmark index endured its fifth successive
losing session on Tuesday.
“Both the Nikkei and TOPIX look ripe for a rebound, but the market lacks
the energy to try, given volatility on the Nasdaq,” said Hiroyuki Nakai,
senior executive officer of investment research at Nippon Global Securities
in Tokyo.
“It all depends on a recovery in the U.S. market, which I’m afraid could
take weeks,” he said. Hong Kong, where interest rates are closely tied to
U.S. rates because of the currency peg, reversed an early gain as investors
sold off telecom stocks and China-related H shares.
The Hang Seng Index had dipped 0.26 percent to 14,103.26 by 0635 GMT.
Taipei’s TAIEX closed off 1.55 percent at 8,671.01 in light, cautious trade.
Besides concern over monetary policy, Malaysian and Philippine stocks also
wilted under domestic political concerns.
A surprise decision by the Chinese leader of Malaysia’s second largest party
to resign cast uncertainty over Prime Minister Mohathir Mohamad’s governing
coalition. The Kula Lumpur Composite Index slid 1.62 percent to 918.39 by
0636 GMT.
Manila stocks remained weak on the country’s worsening Moslem insurgency
problem and a weakening peso. The 33-share main index closed off 0.53
percent at 1,404.67. One of the few major stock market indices to eke out a
gain was Australia’s S&P/ASX 200, which closed up 0.64 percent at 3,021.4.
The euro was in slightly better shape having put almost two cents of space
between it and last week’s record lows. The euro was at $0.9065/70 at 0720
GMT, having climbed as high as $0.9073 on Monday in New York from a low
around $0.8845 on Friday.
The dollar was hovering at 106.97/7.02 yen, after ending at 107.09 in New
York, with support pegged at 106.70/80 and resistance from Japanese exporter
offers at 107.45.
