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Tech stock slide spreads to Asia; Korean won drops
[SYDNEY] A slide in technology stocks spread to Asia from the US as investors sold some of this year's best performers. South Korea's won slid after its central bank said it would keep an accommodative policy stance after raising interest rates for the first time since 2011.
Hong Kong and South Korean-listed shares tumbled, while Japan's edged lower. Australian shares fell, with lenders declining after the government announced an inquiry into banks.
A measure of technology companies was the the biggest drag on the MSCI Asia Pacific Index after US tech stocks slumped overnight. The US drop signalled a rotation away from the year's leaders into financial stocks, perhaps prompted by the shape of tax legislation in the Congress.
The pound hit its highest since October on optimism about Brexit talks. Senate Republicans voted to begin the debate on their sweeping tax-overhaul bill. Optimism the Senate will pass cuts to corporate taxes is buoying sentiment for corporate earnings growth, with Federal Reserve Chair Janet Yellen's comments that economic growth is "increasingly broad based" sending Treasuries lower as they added to enthusiasm for economic expansion.
Meanwhile, questions are being raised about how long the markets' rally can be sustained. Goldman Sachs Group Inc said that the prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, which eventually will lead to a bear market.
And Credit Suisse Group AG said that the bull run may be entering the last stretch, before petering out in the second half of 2018. They join Morgan Stanley in warning that next year won't be easy for equity investors.
In Asia, the Bank of Korea raised its key interest rate to 1.5 per cent from 1.25 per cent, the first hike in more than six years. Japan's industrial production picked up in October from a year earlier, the 12th consecutive month of gains, underpinned by exports, which are performing at their best since the global financial crisis.
China's official factory gauge unexpectedly rose as global demand for products helped cushion the effects of a pollution cleanup as officials order polluting mills to shut down or reduce production during winter.
The kiwi dollar took a hit after New Zealand business confidence slumped to the lowest since 2009. Elsewhere, oil declined before Opec meets to decide on prolonging supply cuts past the end of March.
Japan's Topix index was little changed as of 1pm in Tokyo and the Nikkei 225 Stock Average was flat. Australia's S&P/ASX 200 Index declined 0.6 per cent. The nation's big four banks were the main drag on the benchmark after Prime Minister Malcolm Turnbull said he would hold a wide-ranging public inquiry into the banks.
South Korea's Kospi index dropped 0.6 per cent. Hong Kong's Hang Seng Index fell 1.3 per cent and the Shanghai Composite Index lost 0.3 per cent.
Futures on the S&P 500 Index were down less than 0.1 per cent. The underlying gauge closed little changed Wednesday. The Nasdaq Composite Index dropped 1.3 per cent and the FANG stocks posted the biggest plunge in almost two years.
The MSCI Asia Pacific Index was down 0.7 per cent.
The Bloomberg Dollar Spot Index was steady. The yen was little changed at 111.96 per US dollar.
The South Korean won plunged one per cent to 1,087.70.
The New Zealand dollar declined 0.5 per cent to 68.49 US cents. The euro rose 0.2 per cent to US$1.1866. Sterling jumped 0.5 per cent to US$1.3471. The Times reported that Dublin and London are close to an agreement on the Irish border, moving closer to a Brexit deal.
Bitcoin was back above US$10,000 after a tumultuous session.
The yield on 10-year Treasuries was steady at 2.38 per cent after climbing six basis points.
Australia's 10-year yield gained about four basis points to 2.51 per cent.
West Texas Intermediate crude was steady at US$57.43 a barrel. It fell 1.2 per cent in the previous session.
Gold was little changed at US$1,284.24 an ounce.