Asian shares fell on Thursday as semiconductor stocks came under heavy selling pressure ahead of Taiwan Semiconductor Manufacturing Co (TSMC) earnings, while bond markets gained support from softer US inflation data that reduced expectations of an immediate interest rate hike.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.7%, led by a sharp decline in South Korea’s KOSPI, which plunged 6.3% as investors sold shares of major chipmakers Samsung Electronics and SK Hynix. Samsung fell 8%, while SK Hynix dropped 11%.
Japan’s Nikkei also declined 3%, while Taiwan shares slipped 0.5%. In contrast, Hong Kong’s Hang Seng Index gained 1.2% as investors shifted towards other sectors.
Investors were closely watching TSMC’s quarterly earnings, with the world’s largest advanced AI chip manufacturer expected to report a fifth consecutive quarter of record earnings and a 59% increase in April-June net profit. However, strong expectations have raised the bar for chip companies, limiting further gains despite positive results.
“Seeing aggressive pullback in Memory/Hardware,” Brian Heavey, an equity trader at JPMorgan, said in a note. “Don’t think there’s a smoking gun ‘negative’ headline driving semis/hardware selloff. I think just shows how high the bar is for semis earnings.”
Meanwhile, US Treasury markets benefited from softer inflation readings, with June producer price data reinforcing expectations that the Federal Reserve is unlikely to raise rates this month. Markets now priced the chance of an immediate rate hike at just 10%, down from 43% earlier in the month.
Oil prices continued to climb amid rising tensions in the Middle East, with Brent crude futures rising 0.6% to US$85.45 a barrel, bringing its weekly gain to 12%. Gold prices remained steady at US$4,055 an ounce.
