Asian markets endured a rocky day of trading on Thursday with chip demand fears, worries over recession and signs the US won’t be letting up any time soon on its aggressive interest rate hikes all weighing on investors’ minds.
Chip stocks took a beating, sending most share indexes across the region down, after grim signals from Micron Technology overnight about excess inventories and sluggish demand.
Japan’s Nikkei ended lower, as Tokyo Electron and Advantest led the losses among chip-related stocks after Micron cut its memory chip supply and capital spending, while travel shares jumped on an increase in foreign tourists.
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Micron was the first major chipmaker to sound an alarm about falling demand for personal computers and smartphones earlier this year in the face of decades-high inflation.
The Nikkei share average fell 0.35% to close at 27,930.57, while the broader Topix inched up 0.15% to 1,966.28.
Shares of Micron dropped 6.7% after the semiconductor admitted it was struggling with a slump in demand.
The news sent Wall Street’s S&P 500 information technology sector 1.4% lower while the Philadelphia SE Semiconductor index slumped 4.3%.
Bucking the trend, Nikkei’s retailers and railway operators jumped after the number of foreign visitors to Japan more than doubled in October from the previous month, as Japan fully reopened after more than two years of Covid-19 restrictions.
Hong Kong’s Hang Seng Index fell 1.15%, or 210.82 points, to 18,045.66, with its tech stocks slipping more than 4% after Micron’s announcement. Mainland Chinese shares also declined, with blue chips falling 1.1%.
The Shanghai Composite Index dipped 0.15%, or 4.55 points, to 3,115.43, while the Shenzhen Composite Index on China’s second exchange was up 0.06%, or 1.21%, to 2,039.21.
US Dollar Rebounds
Elsewhere across the region, South Korea’s Kospi dropped 1.1%, while Indian stocks slipped with Mumbai’s signature Nifty 50 index down 0.36%, or 65.75 points, to close at 18,343.90.
Globally, Wall Street’s main indexes ended lower overnight, as a grim outlook from retailer Target spurred fresh concerns about retailers heading into the crucial holiday season.
And the US dollar rebounded after stronger-than-expected US retail sales suggested the Federal Reserve was unlikely to ease up in its battle with inflation.
Money markets are giving 93% odds that the Fed will slow to a half-point rate increase on December 14, with just 7% probability of another 75 basis point increase.
However, traders still see the terminal rate close to 5% by next summer, up from the current policy rate of 3.75-4%.
Crude, Gold Slide
The US dollar index – which measures the currency against six major counterparts – added 0.13% to 106.41, stabilising after a slide as low as 105.30 on Tuesday following the release of producer price inflation numbers.
The euro sank 0.14%, while the risk-sensitive Aussie dollar slipped 0.4%.
US 10-year Treasury yields recovered modestly from a six-week low at 3.671% hit overnight in Tokyo trading, last standing at about 3.71%, while the two-year yield continued to consolidate near its lowest level since October 28 around 4.37%.
Gold slid 0.6% to about $1,763 an ounce amid a firmer dollar.
Crude oil continued to decline in Asia after settling more than a dollar lower overnight, following the resumption of Russian oil shipments via the Druzhba pipeline to Hungary and as rising Covid-19 cases in China weighed on sentiment.
Brent crude futures dropped by $1.07, or 1.2%, to $91.79 a barrel, while US West Texas Intermediate crude futures fell $1.21, or 1.4%, to $84.38 a barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 0.35% at 27,930.57 (close)
Hong Kong – Hang Seng Index < DOWN 1.15% at 18,045.66 (close)
Shanghai – Composite < DOWN 0.15% at 3,115.43 (close)
London – FTSE 100 < DOWN 0.56% at 7,310.36 (0940 GMT)
New York – Dow < DOWN 0.12% at 33,553.83 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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