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Insight into the Upcoming Day in Asian Markets
The recent trend of profit-taking in U.S. Big Tech and AI stocks is gaining momentum, which may dampen investor sentiment and risk appetite in Asia on Tuesday. This unease might be counterbalanced by a rotation into undervalued sectors. Despite the Dow's rise to a one-month high on Monday, caution may dominate the market ahead of U.S. inflation figures on Friday, the last trading day of the quarter.
The macroeconomic environment at the week's outset seems supportive for Asian and emerging markets, with Treasury yields declining on Monday and the dollar experiencing its most significant fall in nearly two weeks. Although Tuesday's regional economic calendar is relatively light, key indicators include consumer price inflation from Malaysia, service sector producer prices from Japan, and consumer confidence metrics from South Korea and Australia, along with trade figures from Hong Kong.
Tech Sector Impact
Investor sentiment in Asia on Tuesday could be influenced significantly by developments in the tech sector. Nvidia's shares dropped by 6.7% on Monday, totaling a 16% decline over three days, which negatively impacted semiconductor and tech shares broadly. Taiwan's benchmark index plummeted nearly 2% on Monday, its sharpest fall in two months, with Taiwan Semiconductor Manufacturing Co. falling more than 3% before Nvidia's slump on Tuesday. Similarly, Hong Kong's Hang Seng Tech index reached a two-month low on Monday before recovering most losses to close down 0.6%. The continuing weakness in U.S. tech and semiconductor stocks could spell trouble for the sector in Asia on Tuesday.
Economic Indicators and Currency Movements
In macroeconomic news, minutes from the Bank of Japan's recent meeting revealed discussions about a near-term interest rate hike, with some policymakers advocating for an increase to curb inflation. However, currency traders appeared unimpressed, as the yen appreciated only slightly on Monday, hovering near the 160 per dollar level, which previously triggered costly yen-buying interventions.
Looking ahead, Friday's Tokyo consumer price inflation figures are anticipated, serving as a barometer for nationwide price pressures. With the yen's weakness and a 12% rise in oil prices over the past three weeks, Japanese officials may become increasingly concerned.
Malaysia Inflation Insights
Malaysia is expected to see a slight increase in annual inflation to 1.9% in May, up from 1.8% in April, according to a Reuters poll.
