Asian Stocks Welcome US Tech Stock Rally

Major Asian shares held firm this week after a strong showing from tech stocks on Wall Street. All three main Wall Street indexes closed higher, with tech stocks, including Apple and Microsoft, showing gains.

The MSCI Emerging Market Index, covering a broad swathe of Asia-Pacific shares outside Japan, rose by 1% to a two-week peak. Hong Kong-listed tech stocks gained 3%, while Japan's Nikkei gained 0.9%.

Market watchers expect forthcoming consumer price index (CPI) data in the US to be enough to drive the US Fed to raise interest rates next month.

US treasury yields held near multi-year highs as expectations hold firm that inflation data will justify interest rate increases. 

Markets remain volatile as investors try to figure out how often, how far and how fast central banks will raise interest rates.

What does this mean for me? 

Despite Asian tech companies sitting across the world from the US, there is considerable interest in what Thursday’s CPI data would yield and many markets expect CPI in the US for January to be 7.3% against 7% for December. If this happens, 10-year bond yields will rise even further. 

Higher bond yields typically cause investors to move out of growth stocks like tech and into value stocks. Therefore, Asian tech stocks are waiting to eagerly see what the Fed does.

As a stock trader, understanding the nuances of how certain types of stocks respond to monetary policy announcements can be an asset as you fine tune your portfolio.