Investor sentiment in Asian markets may be dampened on Tuesday due to profit-taking in U.S. Big Tech and AI stocks. This trend could be offset by a rotation towards cheaper and weakened sectors. While the Dow Jones reached a one-month high on Monday, the Nasdaq fell for the third consecutive day, leading to caution ahead of Friday’s U.S. inflation numbers.
Despite this, the macroeconomic outlook at the beginning of the week is favorable for Asian and emerging markets, with Treasury bond yields slightly down and the dollar experiencing its largest drop in nearly two weeks. Tuesday’s economic calendar includes Malaysia’s consumer price inflation, Japan’s service sector producer prices, and consumer confidence measures in South Korea and Australia, as well as Hong Kong trade figures.
The technology sector is a key focus in Asia, with Nvidia shares falling 6.7% on Monday and Taiwan’s benchmark index experiencing its largest drop in two months. Taiwan Semiconductor Manufacturing Co also suffered losses. The Hang Seng Tech Index in Hong Kong hit a two-month low before rebounding. The weakness in U.S. technology and semiconductor stocks could impact the sector in Asia on Tuesday.
In terms of macroeconomic news, the Bank of Japan’s latest meeting minutes suggest discussions around raising short-term interest rates to combat inflation. However, currency traders remain relatively unmoved, with the yen appreciating marginally. Japan’s upcoming Tokyo consumer price inflation data will be closely watched.
In Malaysia, annual inflation is expected to have increased slightly in May. Key developments affecting markets on Tuesday include Japan’s Services PPI, Malaysia’s CPI, and Australian consumer sentiment for June. Investors will be closely monitoring these factors to determine market direction.
Overall, caution is advised in Asian markets due to profit-taking in U.S. tech stocks and upcoming economic data releases. The impact of these factors on investor sentiment and risk appetite remains to be seen.
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