Asian shares follow global technology shares lower

Sydney — Asian share markets weakened on Tuesday, taking cues from the rout in global technology shares while the yen edged higher ahead of the Bank of Japan’s rate review, at which it could flag a shift away from its massive monetary stimulus.

Japan’s Nikkei fell 0.5%. South Korea’s Kospi index dipped 0.1% despite solid second-quarter results from Samsung Electronics, which posted a 5.7% rise in profit.

MSCI’s broadest index of Asia-Pacific shares outside Japan was mostly unchanged at 543.23, as were Australian shares.

Overnight in Wall Street, the Dow Jones industrial average and the S&P 500 index each lost 0.6%, and the Nasdaq composite index fell 1.4%.

The technology index crumbled 1.8% overnight as disappointing results from Facebook, Twitter and Netflix spurred concern about future growth for a sector that has led US equities to record highs.

“US equities took another leg lower overnight but sentiment towards risk looks more upbeat across other asset classes,” analysts at JP Morgan said in a note.

“The Bank of Japan decision today [Tuesday] is the main focus,” they said.

The yen climbed 0.1% to ¥110.92 to the dollar from a more than six month trough of ¥113.15 touched earlier in July.

Speculation that the BoJ will dial back its stimulus also led yields on Japanese government bonds to tick up overnight. Other government bond yields edged higher too.

Japan’s central bank will probably consider taking steps to make its massive stimulus programme more sustainable, such as allowing greater swings in interest rates and widening its stock-buying selection, according to sources.

“We would look to fade the recent yen rally ahead of the BoJ,” analysts at NAB said.

“Looking further out, a BoJ that remains very accommodative for an extended period will challenge our expectations for yen to appreciate amid its fundamental cheap valuation and our expectations of a softer dollar environment in 2019.”

Elsewhere, most major currencies stuck to narrow trading ranges ahead of several central bank decisions.

The US Federal Reserve concludes its policy meeting on Wednesday and the Bank of England is expected to raise interest rates on Thursday.

Month-end macroeconomic data is also due from China on Wednesday.

The pound held at $1.3132, drifting away from a more than 10-month trough of $1.2955 touched earlier in July.

The euro was flat at $1.1707 after two consecutive sessions of gains.

The dollar index, which measures the greenback against a basket of major currencies, was flat at 94.332.

In commodities, US crude eased 3c to $70.10 a barrel after a sharp rally overnight while Brent settled 68c higher at $74.97.

Spot gold was a tad firmer at $1,223 an ounce.

Reuters