TSX runs higher on rate cut expectations
Investing.com-- Most Asian stocks rose on Friday tracking overnight strength in Wall Street, although Japanese markets lagged as data showed consumer inflation remained sticky in June, presenting a hawkish outlook for the Bank of Japan.
Stellar earnings from chipmaking bellwether TSMC (NYSE:TSM) (TW:2330) also provided limited cheer to the sector, after the firm flagged some concerns over the impact of higher U.S. trade tariffs.
Still, risk appetite in Asia was upbeat after the S&P 500 and the NASDAQ Composite hit record highs on Thursday, buoyed by a mix of strong earnings and economic data. S&P 500 Futures rose 0.1% in Asian trade.
Australia’s ASX 200 hits record high, Asia tracks Wall St strength
Australia’s ASX 200 was a standout performer, rising 1.2% to a record high of 8,743.30 points. The index marked extended gains after dismal labor data released earlier in the week furthered bets that the Reserve Bank of Australia will have to cut interest rates further in the coming months, following a surprise hold in July.
Australian stocks also tracked overnight gains on Wall Street, with broader Asian markets largely following suit.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.6% and 0.3%, respectively, while Hong Kong’s Hang Seng added 0.9%.
Singapore’s Straits Times index rose 0.4%, while Gift Nifty 50 Futures for India’s Nifty 50 index fell 0.1%.
Markets are holding out for an India-U.S. trade deal, which U.S. President Donald Trump said was close.
Japan’s Nikkei 225 falls on sticky inflation, trade concerns
The Nikkei 225 lagged its Asian peers on Friday, losing 0.3%, while the TOPIX shed 0.2%.
Consumer price index data showed a slightly bigger than expected decline in core inflation in June. But a core reading that is watched by the BOJ as an indicator of underlying inflation rose to 3.4%, pushing further above the central bank’s 2% annual target.
The reading showed Japanese inflation remained largely sticky, especially with food prices being underpinned by an ongoing surge in rice supplies.
Sticky inflation gives the BOJ more impetus to raise interest rates.
But Capital Economics analysts said that while this was the case, they warned that the threat of Trump’s trade tariffs was likely to stay the BOJ’s hand.
“With trade tensions looming large over the economy, the risk remains that the BoJ will stand pat for longer than we’re anticipating,” Capital Economics analysts wrote in a note.
Japan faces a 25% U.S. tariff starting from August 1.
TSMC near record highs on stellar Q2, but chip stocks stall on tariff caution
Taiwan shares of TSMC rose over 2% and were near record high levels last seen in January, after the world’s largest contract chipmaker clocked a record profit in the second quarter.
The company benefited greatly from robust artificial intelligence-driven demand for its advanced chips, and said that this trend was unlikely to change in the coming months.
But CEO C.C. Wei did flag some caution over the impact of U.S. trade tariffs on chip demand, especially in non-AI sectors. TSMC’s annual outlook was also seen as somewhat cautious by analysts.
TSMC’s warning also comes after chip equipment giant ASML Holding NV (AS:ASML) warned on the impact of
This left broader Asian chip stocks trading mixed on Friday. Asian chipmakers had reacted negatively to ASML’s warning, given that the firm, along with TSMC, is considered as a bellwether for the industry.
South Korean memory chip giant SK Hynix Inc (KS:000660) saw extended losses on Friday, which in turn dragged the KOSPI index down 0.4%.
Chipmaking stocks in Japan and China, such as Semiconductor Manufacturing International Corp (HK:0981) and Tokyo Electron Ltd. (TYO:8035), also moved in a flat-to-low range.