ASIA MARKETS: Asia-Pacific Markets Drop On Weakness In Tech, Mining Sectors

By Kenan MachadoFeaturesDow Jones Newswires

Nikkei down as yen gains; Australia's top mining companies down 2% each

Asia-Pacific equities experienced fresh selling Wednesday following modest overnight declines in Europe and the U.S., as commodity prices added to ongoing softness.

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Tech stocks were key to Tuesday's weakness in Asia and the up-to-3% overnight slide in metals prices added to pressure on Wednesday.

The Nikkei ended morning trading down 0.9% Wednesday, just off session lows, on weakness in commodity stocks and yen gains. The U.S. dollar fell to Yen112.40 from Yen112.60 earlier.

The Topix mining subindex finished the early session down 1.5%, while the iron and steel group dropped 1.2%.

Old-economy stocks also lagged in China, where the Shanghai Composite fell 0.7%. The Shenzhen Composite , which has a greater tech profile, was 0.2% lower.

Australia's S&P/ASX 200 fell 0.3% despite roughly 2% declines for big miners Rio Tinto (RIO) and BHP Billiton (BHP.AU) . The country's big banks rebounded about 0.5% as the local dollar slid to its lowest level of the week following lower-than-expected economic growth for the third quarter.

Broadly speaking, "we are starting to see a little bit of diversification outside of the highly concentrated names" as the year draws to an end, said Paul Kitney, chief equity strategist for Asia Pacific at Daiwa Capital Markets.

He said the recent pullback in some hot areas, notably tech, was healthy and it isn't a sign that things have changed fundamentally. "The mind-set now is so used to low volatility that a healthy correction of 2% to 3% is making people talk about it."

But the tech sector isn't out of the woods. In Tokyo, Apple vendor Alps Electric (6770.TO) fell 2%. Meanwhile, the tech-heavy Taiex index in Taiwan dropped 1.1% to near three-month lows and Korea's Kospi declined 0.5%.

Some tech companies were lower in Hong Kong, with AAC Technologies Holdings (2018.HK) and Sunny Optical Technology Group (2382.HK) skidding 3% and 7%, respectively.

But Tencent Holdings (0700.HK) was up slightly after a substantial pullback over the past two weeks. And Geely Automobile Holdings (0175.HK) slid 7%. The Hang Seng as recently down 1.4%.

Following tech-driven stock gains this year, investors have become skittish about tax implications from U.S. legislation, said Douglas Morton, head of research for Asia at Northern Trust Capital Markets. But "little has changed fundamentally in our opinion."

Still, there has been caution this week as Republicans continue work on the tax policy.

Elsewhere, oil futures were down nearly 0.5% in Asia and the U.S. gasoline benchmark fell 1% after an industry group said inventories jumped in America last week.

(END) Dow Jones Newswires

December 05, 2017 22:35 ET (03:35 GMT)