Technology Stocks Lead Asia Rally Amid Earnings Outlook Optimism

  • China stocks erase losses as small caps rebound late Tuesday
  • Indian cigarette makers tumble after levies raised on products

Asian equities rose, erasing earlier declines, as shares of software companies and chip makers gained on hopes that a weaker U.S. dollar may improve their outlook for earnings.

The MSCI Asia Pacific Index rose for a seventh day in a row, adding 0.1 percent to 157.82 as of 4:38 p.m. in Hong Kong, heading toward its longest winning streak since March. The dollar slid to a 10-month low as Senate Majority Leader Mitch McConnell abandoned efforts to pass a broad Republican-only replacement of Obamacare.

"Broad decline in U.S dollar amid less aggressive bets on Fed rates has helped IT stocks," Jingyi Pan, market strategist at IG Asia Pte said by phone in Singapore. "This week will remain about monetary policy. Japan may remain accomodative while Mario Draghi may stick to recent change in tone of being more hawkish."

Chinese stocks reversed losses in the last hour of trading Tuesday as the ChiNext gauge of small-cap shares climbed 0.8 percent after sinking 5.1 percent on Monday. Japanese stocks fell following a three-day weekend as the yen gained on worse-than-expected U.S. economic data.

Investors in general want to buy the dips in Asia as there is still reasonable value and earnings outlook remains favorable, said Joshua Crabb, head of Asian equities at Old Mutual Global Investors.

Watch video: Old Mutual’s Crabb Says Asian Markets Can Go Higher

Summary

  • Topix index -0.3%, Nikkei 225 Index -0.6%
    • Japan Stock Summer Rally Likely on 2 Positive Signs: SMBC Nikko
    • GPIF Needs to Pay More Than Lip Service to Governance: Gadfly
  • Hang Seng Index +0.2%, Hang Seng China Enterprises Index -0.3, Shanghai Composite Index +0.4, Taiex +0.2%
  • Australia’s S&P/ASX 200 Index -1.2, New Zealand’s NZX 50 little changed +0.1%
  • Kospi Index little changed, Kospi 200 Index little changed
  • Straits Times Index +0.2%, FTSE Bursa Malaysia KLCI Index little changed, Philippine Stock Exchange PSEi Index +0.2%
  • Sensex Index -1.1%, Nifty 50 Index -0.9%
    • Tobacco Tax U-Turn Burns $7 Billion Hole in ITC’s Market Value
    • ITC Plunges as Analysts Downgrade on India Tax Hike: Street Wrap
    • Overseas Investors Buy Net 5.36b Rupees of Indian Equities
    • India Stock Correction Would Be Opportunity to Buy INR: JPMorgan
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