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Stocks rise as global tech rout eases, pound gains

Sydney - Stocks advanced as the global selloff in technology shares showed signs of easing, while the pound strengthened as Theresa May sought to secure the votes needed to prop up her minority government.

Technology shares in the MSCI All-Country World Index were little changed, after the Nasdaq 100 Index capped its biggest two-day decline since September.

 Australian equities rallied the most since November as bank stocks jumped. Crude oil traded above $46 a barrel following its first back-to-back gain in three weeks. Treasuries and the dollar were little changed before this week’s Federal Reserve policy decision.

The sudden slide in tech stocks, whose gains had helped send global equities to repeated record levels this year, blindsided many investors after markets largely brushed aside last week’s trio of high-risk events.

The question now is whether the drops represent merely a pause or a more fundamental crack in the US stock bull market. The Nasdaq 100 fell as much as 1.9% before paring losses into the close.

Samsung Electronics was little changed after leading declines in Asia during Monday’s rout. Tencent, which tumbled 2.5% in the previous session, and Taiwan Semiconductor Manufacturing, which dropped the most since December, both advanced more than 0.2% on Tuesday. In Europe, ASML rose 0.7% after sliding 3.9% in the previous session.

Despite the tech selloff and political uncertainties in Washington and London, global stocks are still trading less than 0.7% from an all-time high. In the UK, May apologised to her own lawmakers for the election debacle as she prepared to meet Northern Ireland’s Democratic Unionists to secure the votes for her minority government.

Here’s what investors will be watching:

Investors may get more drama from Washington as Attorney General Jeff Sessions will testify publicly on Tuesday before the Senate Intelligence Committee.

He will likely face pressure to explain his role in the firing of James Comey and contacts that he and associates of President Donald Trump had with Russian officials. Fed policy makers are forecast to raise their benchmark interest rate for the second time this year on Wednesday. Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index climbed 0.4% as of 09:14, after dropping 1% on Monday. Japan’s Topix rose 0.1%, while the Nikkei 225 Stock Average fell less than 0.1% amid continued weakness in SoftBank and other technology companies.

Australia’s benchmark gauge climbed 1.7%, with energy and financial shares leading the way as investors returned from a holiday. South Korea’s Kospi added 0.7%.

Hong Kong’s Hang Seng increased 0.4% and the Shanghai Composite Index advanced 0.4%. Futures on the S&P 500 Index rose 0.2%.

The Nasdaq 100 fell 0.6% on Monday, adding to its 2.4% rout on Friday. Apple fell 2.4% while Microsoft slid 0.8%. Losses in the S&P 500 were muted, with the benchmark gauge down 0.1%.

Currencies

The pound strengthened 0.2% to $1.2680, after sliding as much as 0.8% on Monday; it hit $1.2636 on Friday, the lowest since May 18.  The euro retreated 0.1% to $1.1193. The Bloomberg Dollar Spot Index was flat. The New Zealand and Canadian dollars rose more than 0.2%. The yen fell 0.2% to 110.14 per dollar, after Monday’s 0.3% gain. 

Bonds

The yield on 10-year Treasuries fell less than one basis point to 2.21%, after rising for four straight sessions. UK, Germany and French benchmark yields all rose one basis point. Australian benchmark yields were little changed at 2.40%.

Commodities

West Texas crude futures rose 0.2% to $46.18, gaining for a third day before US government data forecast to show crude stockpiles resumed declines after an unexpected rise. Gold slipped 0.1% to $1 264.91, after four straight days of losses as investors anticipate the Fed will raise rates on Wednesday.

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