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Asian stocks sink as US-China trade jitters offset Nvidia tech boost

Published 05/22/2024, 10:52 PM
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Investing.com-- Most Asian stocks fell on Thursday with Chinese markets leading declines as a trade war with the U.S. appeared to be heating up, while fears of higher interest rates also weighed on sentiment.

Still, some chipmaking stocks rose tracking positive earnings from Nvidia. 

Regional markets took a weak lead-in from Wall Street, which fell in overnight trade after the minutes of the Federal Reserve’s late-April meeting showed increasing concerns among policymakers over sticky inflation. Some policymakers also expressed readiness to hike rates further to bring inflation down- a trend that bodes poorly for risk-driven stock markets.

U.S. stock index futures rose in Asian trade, buoyed by blowout earnings from market darling NVIDIA Corporation (NASDAQ:NVDA). 

Chinese markets tumble from recent peaks on US trade fears 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes slid about 0.9% each on Thursday, pulling back further from their highest levels in 2024.

Hong Kong’s Hang Seng index saw even steeper losses, sinking 1.8% after surging to a nine-month high earlier in May.

Losses in China were driven by renewed concerns over a trade war with the U.S., after President Joe Biden’s administration said new tariffs on about $18 billion worth of Chinese imports will be imposed from August 1. 

The tariffs are targeted at key upcoming Chinese sectors, including electric vehicles and semiconductors. 

Beijing appeared to have retaliated to the tariffs by banning trade activities related to China by some U.S. companies, as well as the shipment of some arms to Taiwan. Reports also said that Boeing’s plane deliveries to China were facing delays due to regulatory scrutiny.

Sentiment towards China was also rattled by the country performing military drills close to Taiwan, which could worsen tensions in the region.

Other Chinese-exposed markets retreated. Australia’s ASX 200 fell 0.6% as purchasing managers index data also showed some softening in business activity. 

South Korea’s KOSPI was flat even as some local chipmaking stocks rose on optimism over Nvidia.

The Bank of Korea kept interest rates steady as widely expected, and hiked its economic growth forecast for the year. 

Japanese stocks rise on strong PMIs, tech strength 

Japan’s Nikkei 225 index rose 0.8%, while the broader TOPIX added 0.4%. 

PMI data showed Japan’s manufacturing sector returned to growth for the first time in 11 months, boosting overall activity.

But technology stocks- specifically chipmakers- were the biggest drivers of Japanese stock gains on Thursday.

Tech, chipmakers gain on Nvidia cheer

Asian technology stocks saw some gains, while chipmakers surged tracking strong earnings and guidance from Nvidia, which reaffirmed hopes that demand from the artificial intelligence industry remained strong. 

Memory chip maker SK Hynix Inc (KS:000660), which is a key Nvidia supplier, rose 2.7%. 

Japanese semiconductor testing equipment maker, Advantest Corp. (TYO:6857), which is also heavily exposed to Nvidia, rose 3.3%, while peers Renesas Electronics Corp (TYO:6723) and Lasertec Corp (TYO:6920) rose over 3% each. 

In Taiwan, top Nvidia supplier TSMC (TW:2330) (NYSE:TSM) rose 1.2%, while electronics supplier Hon Hai Precision Industry Co Ltd (TW:2317), also known as Foxconn, added 1.5%.

Elsewhere, futures for India's Nifty 50 index pointed to a weak open, on pressure from concerns over U.S. rates.

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