Asian shares were volatile on Tuesday as investors tried to build on a record day on Wall Street, where technology firms rallied after a hefty sell-off in the past two weeks, while the yen held a four-decade low against the dollar.
With optimism that the US-Iran crisis will eventually end and the Strait of Hormuz reopen, attention has turned to central bank monetary policy and the future of the AI boom.
The technology sector — which has led a global rally in markets and pushed some companies to record highs — has been hit of late by fears over stretched valuations, interest rates and when traders will see returns on their investments.
But a rush to win bargains after that selloff fueled a rally in New York, where the Dow hit a new high and the Nasdaq climbed more than two percent.
That came thanks to strong finishes for the Magnificent Seven shows, including Amazon, Meta and Nvidia.
“Following last week’s record high tech sell-off, buyers returned to the same names they were dumping just days ago,” said Stephen Innes of SPI Asset Management.
“That doesn’t mean the AI trade is suddenly cured. It means the patient stopped bleeding long enough for surgeons to start offering backup.
“For Asia, and especially Korea and Japan, this is surrender.”
However, investors were unable to match their US counterparts, with Seoul’s Kospi – the year’s best performing benchmark – falling again, while Hong Kong, Shanghai, Singapore and Manila also fell.
There were gains in Tokyo, Sydney, Taipei and Wellington.
Traders were keeping an eye on Tokyo amid speculation the government could intervene in currency markets as the yen hit its weakest level against the dollar since 1986.
The unit reached as high as 162.40 per dollar amid expectations that the Federal Reserve will raise interest rates this year.
The moves come ahead of US jobs data on Thursday, with analysts warning that a stronger-than-expected reading could boost bets on a US growth sooner rather than later.
A rise in borrowing costs to a 31-year high by the Bank of Japan this month did little to support the yen, with warnings from government officials about an intervention also falling flat.
Finance Minister Satsuki Katayama was reported by local media as saying on Tuesday that Tokyo “will take appropriate action at any time as necessary.”
The government spent a record $72.4 billion to prop up the unit between April 28 and May 27 after it initially fell above $160.
“A big catalyst behind the dollar’s move has been the arrival of new Federal Reserve Chairman Kevin Warsh, whose public comments have been interpreted as significantly more hawkish” than US President Donald Trump might have wished, said IG’s Axel Rudolph.
Warsh has repeatedly stressed the importance of maintaining the Fed’s credibility to fight inflation and has signaled a willingness to keep policy tight if price pressures prove persistent.
“The prospect of higher US interest rates has widened the expected policy gap between the United States and many of its major trading partners, boosting demand for dollar-denominated assets.”
Oil prices eased as worries over Middle East peace talks eased after the United States and Iran exchanged fire at the weekend.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.9 percent to 70,116.82 (break)
Hong Kong – Hang Seng Index: DOWN 1.1 percent to 22,766.73
Shanghai – Composite: DOWN 0.4 percent to 4,058.89
Dollar/yen: UP 162.15 yen from 161.92 yen on Monday
EUR/USD: DOWN at $1.1403 from $1.1430
Pound/dollar: DOWN at $1.3235 from $1.3261
Euro/pound: DOWN to 86.14 pence from 86.17 pence
West Texas Intermediate: DOWN 0.4 percent to $70.46 a barrel
Brent North Sea crude: DOWN 0.6 percent to $72.70 a barrel
New York – Dow: UP 0.6 percent to 52,182.74 (close)
London – FTSE 100: DOWN 0.2 percent to 10,484.22 (close)
