Tech stocks rebound set to reach Europe – Financial Times

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Japan stocks have a good day – people walk past an electronic stock indicator in Tokyo © AP

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Thursday 07.40 GMT

What you need to know

  • Tech stocks rebound as investors buy into the sector’s recent dip
  • China’s stocks miss out on rebound as worries about leverage linger
  • Dollar buoyed by agreement on US tax cuts
  • Australian dollar dips on disappointing trade data
  • Oil prices steady
  • Bitcoin scales $14,000

Leading quote

“Can a ‘buy the dip’ mentality persist? G4 central bank liquidity does not peak until first quarter next year though any drawdown in liquidity will be gradual,” says Neil MacKinnon at VTB Capital.

“A Chinese liquidity squeeze [remains a factor] as the authorities turn the deleveraging screws.”

Hot topic

Asia equities are mainly higher, helped by demand for technology stocks, which are bouncing back following hefty losses in the previous session. But mainland Chinese stock indices are bucking the trend, as worries about a regulatory crackdown on leverage levels lingers.

The CSI 300 is down 1.1 per cent, with the Shanghai Composite down 0.7 per cent. The Shenzhen Composite is down 0.6 per cent. After a loss of over 2 per cent over the previous session, Hong Kong’s Hang Seng is up 0.2 per cent, in line with a stronger showing on wider Asian markets. The technology sector jumped 1.8 per cent with Apple supplier AAC Technology and index heavyweight Tencent up 1.8 per cent and 2.4 per cent respectively.

European bourses are expected to rise, with opening calls from CMC Markets pointing to gains of 20 points for the FTSE 100 and 41 points for the Xetra Dax 30.

Japan’s Topix index rose 1 per cent after a 1.4 per cent fall in the previous session. The IT sector ticked 1.7 per cent higher and industrials rose 1.1 per cent. Nintendo and Tokyo Electron jumped 2.5 per cent and 3.7 per cent respectively.

In Sydney the S&P/ASX 200 rose 0.7 per cent as financials gained 0.9 per cent and materials edged up 0.2 per cent.

US equities struggled for direction overnight with the S&P 500 ending the day barely changed at 2,629 as the tech sector sub-index rose 0.9 per cent. The energy sector was off 1.3 per cent on lower oil prices.

Forex

In currencies, the Australian dollar was on the back foot following trade data showing the October trade surplus narrowed to A$105m ($79.2m), below expectations for a A$1.4bn surplus on lower demand for iron ore and coal. That pushed the Australian dollar down 0.3 per cent to $0.7543, a two-week low.

“It’s possible that the total trade surplus will turn into a deficit in the coming months, at least for a short while,” said Paul Dales, chief Australia and New Zealand economist for Capital Economics. “And while it is early days yet, after making a neutral contribution to GDP growth in the third quarter, net exports may be a small drag on GDP growth in the fourth quarter.”

The dollar index, a measure of the greenback against a basket of peers, was flat at 93.596 and the euro was steady at $1.1798. The Japanese yen dipped 0.1 per cent to ¥112.43 and the pound weakened to $1.3375.

Fixed income

The yield on the 10-year US Treasury was down 0.9 basis points at 2.342 per cent.

Commodities

Brent oil edged higher to $61.41 a barrel after shedding 2.6 per cent in the previous session and West Texas Intermediate rose 0.3 per cent to $56.10 a barrel. Data released on Wednesday showed Crude stocks fell by a bigger than expected 5.6m barrels last week, although gasoline supplies rose more than forecast.

Bitcoin climbed to a record high of $14,047, crossing the $14,000 threshold for the first time.

Gold dipped to $1,262.86 an ounce.

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