*
Tech drives initial rally, but stock traders cautious
after weak
US data
*
Divergent views among Fed officials cloud outlook for
December
rate cut
*
RBA refrains from rate cut as widely expected, flags
inflation
concerns
(Updates prices ahead of European markets open)
By Kevin Buckland
TOKYO, Nov 4 (Reuters) - Asian stock markets from Tokyo
to Taipei and Seoul tumbled from all-time highs on Tuesday, with
investors aggressively booking profits following strong tech-led
rallies over recent weeks.
Sentiment was weighed by weakness in U.S. economic data,
while a divergence in views from Federal Reserve officials
clouded the outlook for a December interest rate cut.
The U.S. dollar rose to a nearly nine-month peak versus the
yen, as well as a three-month high against the euro.
Australia's central bank refrained from lowering rates, as
widely expected, and signaled caution about any further easing
amid heated inflation.
Overnight, a rally in U.S. tech shares buoyed both the U.S.
S&P 500 and Nasdaq, though futures pointed
sharply lower on Tuesday, down 0.9% and 1.3%
respectively. Pan-European STOXX 50 futures dropped
0.9%.
The catalyst for the latest leg up was Amazon's $38 billion
cloud services deal with ChatGPT creator OpenAI.
"People are turning cautious about these circular
transactions around AI, with Nvidia at the centre of
everything," said Tony Sycamore, an analyst at IG.
"It's concerns about all the capex that's been spent,
without knowing where the revenue is going to come from."
Japan's Nikkei added 0.4% to reach a record
52,636.87 early in the day, though it later lost 1.7%.
Taiwan's TAIEX initially gained as much as 0.8% to
set its own record high before sliding 0.8%.
South Korea's KOSPI tumbled 2.3% following a 2.8%
surge on Monday, when it reached an all-time peak.
Hong Kong's Hang Seng dropped 0.9% and onshore-listed
Chinese blue chips slid 1.1%.
Australia's stock benchmark lost 0.9%, while the
Aussie dollar slumped 0.5%.
The U.S. dollar was supported by reduced bets for near-term
Fed easing, edging up to 154.48 yen for the first time
since February 13, and to $1.1498 per euro for the first
time since August 1.
The U.S. dollar index, which measures the currency
against the euro, yen and four other peers, topped 100 for the
first time in three months.
However, those advances evaporated as traders bought the yen
and euro for their haven appeal as stock markets slid.
The polarised views on policy among Fed officials have also
become a source of worry for the market, particularly with
official economic data still suspended due to the federal
government shutdown, leaving investors groping in the dark for
clues on U.S. economic health.
Accounts from manufacturers in the private Institute for
Supply Management survey on Monday painted a dire picture of the
factory sector, showing U.S. manufacturing contracted for an
eighth straight month in October as new orders remained subdued.
Fed Governor Stephen Miran on Monday restated the case for
deep rate cuts, while Chicago Fed President Austan Goolsbee said
he was leery of further reductions while inflation remained
significantly above the central bank's 2% target.
The Fed lowered rates last week but Chair Jerome Powell
suggested that might have been the last cut of the year.
Traders are now pricing in a 67.3% chance of a rate cut in
December, compared with 90.5% a week earlier, CME FedWatch
showed.
Gold failed to benefit from haven flows, as it
continued to find its footing following a sharp retreat from a
record high in mid-September. Bullion was last down 0.6% at
around $3,977 per ounce.
Crude oil prices slipped as markets read OPEC+'s decision to
pause output hikes in the first quarter as a signal of
oversupply in the market.
Brent crude futures edged down 0.4% to $64.65 a
barrel and U.S. West Texas Intermediate crude was off
0.4% at $60.82 a barrel.