Asian stocks drop as tech rally falters

MSCI’s gauge of equities declined 1.1 per cent after closing at a record high on Monday

Asian stocks dropped as a rally in technology shares faltered while investors awaited further developments in Iran-US talks.

MSCI’s gauge of equities declined 1.1 per cent after closing at a record high on Monday. A subgauge of tech stocks slipped after an eight-day winning run.

Brent crude was little changed to trade below $78 a barrel after sliding more than 3 per cent on Monday, when both Tehran and Washington cited progress in the first round of discussions toward a lasting peace agreement.

The US agreed to let Iran sell oil on the international market for 60 days but some discrepancies have emerged – US Vice-President said Iran agreed to allow nuclear inspectors into the country, a claim rejected by Iran.

The weakness in megacap tech overnight is putting pressure on market sentiment, said Fabien Yip, a market analyst at online brokerage IG International.

While the US-Iran peace deal continues to make progress, there are still fundamental differences on how both countries interpret the terms, Yip said.

The MSCI Asia Pacific Index soared 26 per cent. Benchmarks in Taiwan, South Korea and Nikkei 225 have each surged at least 40 per cent.

While geopolitical developments are likely to remain a key source of volatility in the near term, shifts in investor confidence regarding the durability of the AI rally may also lead to bouts of market swings, according to Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

Among market moves, Topix dropped 1.1 per cent, S&P/ASX 200 was little changed and Hang Seng pulled back 1.1 per cent.