Asian stocks rally, investors pile into technology stocks

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1% led mainly by tech stocks, recouping some of the losses from last week when it dropped 4%

Asian stock markets rallied on Tuesday, while investors piled into technology stocks shrugging off concerns the sector was becoming overheated.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1% led mainly by tech stocks, recouping some of the losses from last week when it dropped 4%. The index is on course for a 3.8% decline in the month, its first monthly drop since March.

Nikkei was up 0.8% in early trading on Tuesday after holiday on Monday. The index slipped 3.5% last week as a bout of risk-off sentiment gripped markets.

Nice to see widespread cross-asset class green on the screens this morning as volatility eases a notch and the Fed put comes into play again, Charlie Aitken, Regal Partners’ investment director, said in a note.

This is classic bull equity market behaviour. A short, sharp pullback in stocks and sectors that have led the market, a flush out of the over-leveraged at the bottom, and a recovery starts, led by the most beaten-up growth stocks and cyclicals, he added.

In the Asian trading session, the yield on benchmark 10-year Treasury notes was flat at 4.0344%. The two-year yield, which rises with traders’ expectations of a higher Fed funds rate, was steady at 3.4872% in Asian hours after declining 2.5 basis points in the previous session.

The sudden shift in rate cut wagers have weighed slightly on the U.S. dollar. The euro last bought $1.1522 after eking out small gains overnight. The dollar index was at 100.2 in early trading.

Despite the dollar’s slight weakness this week, the yen has remained fragile, trading at 156.95 per dollar in early Asian hours, not far from the 10-month low of 157.90 it hit last week.