Asia stocks steady after rally, focus back on fundamentals
Asian stocks steadied on Tuesday as investors paused for breath after the previous day’s rally, although tech-inspired Wall Street gains supported broader sentiment as focus shifted to bullish economic fundamentals, away from trade concerns.
Spreadbetters expected European stocks to open flat to slightly lower, with Britain’s FTSE .FTSE declining 0.2 percent, Germany’s DAX .GDAXI little changed and France’s CAC .FCHI slipping 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was effectively flat after surging 1.4 percent the previous day.
Wall Street’s three major indexes rose overnight, led by a rally in tech stocks, pushing the Nasdaq to a record closing high.
Friday’s better-than-expected May U.S. employment report has helped revive investor optimism about the world’s biggest economy, shifting the focus away from recent trade tensions.
“Strong U.S. data put fundamentals back in the spotlight, just as Italian political concerns were ebbing,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
Italy’s anti-establishment parties formed a coalition government on Friday to end three months of deadlock and averting potentially destabilising snap elections.
“The next focal point is the upcoming FOMC (Federal Open Market Committee) meeting and whether the Fed shows any indication of accelerating the pace of its rate hikes following the strong employment report,” said Ichikawa.