Asian stocks slide as investors look past bullish tech earnings | Invest News


TOKYO (Reuters) – Asian stocks fell on Friday as profit taking by Taiwanese chip giant TSMC, despite record profits, weighed on other tech companies and a broader sense of risk, while a prospect More accommodating on US rates kept bond yields near multi-month lows.

Europe’s lead was mixed with Eurostoxx 50 and Spanish IBEX futures barely changed, German Dax futures up 0.1%, while those on London’s FTSE increased by 0.3%.

MSCI’s largest Asia-Pacific stock index outside of Japan shed 0.4%, weighed down by a 0.8% drop each in the Chinese blue chip index and Taiwanese stocks after TSMC earnings Thursday.

TSMC, Asia’s largest company by market capitalization outside of China, fell nearly 4% after profiting on Thursday.

As the world’s largest contract chipmaker posted record quarterly sales and forecast higher earnings, investors took profits, fearing its best times were already behind it.

“His earnings were great and to me the market seems a bit over the top,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “But the drop in its profit margin has led to believe that its growth momentum may reach its peak.”

TSMC’s fall weighed on many other semiconductor-related stocks in the region, with South Korea’s Kospi shedding 0.4% and Japan’s Nikkei shedding around 1%.

Weakness in chip-related stocks also helped push the S&P 500 down 0.33% and the Nasdaq Composite 0.70% on Thursday.

While these indices remained near record highs, supported by the outlook for an economic recovery, investors were wary of riskier and less liquid assets.

The Russell 2000 index of US small-cap stocks fell 0.6% to a nearly two-month low. Special Purpose Acquisition Companies (SPACs), or “blank check companies”, were once booming, with the Ipox Spac index hitting its lowest level in seven months.

Investors instead flocked to bonds, after Federal Reserve Chairman Jerome Powell reiterated that the rise in inflation would likely be transient and the US central bank would continue to support the economy.

Powell on Wednesday pledged “strong support” to complete the United States’ economic recovery from the coronavirus pandemic, a message he repeated on Thursday.

The yield on 10-year US Treasuries fell to 1.302%, approaching the five-month low of 1.250% reached last week.

The yield on US inflation-protected bonds fell to minus 1.043%, a five-month low.

Bond yields fell even as data earlier this week showed US consumer inflation hitting its highest level in 13 years.

“Short positions in bonds just don’t work, so much so that you just lose strength,” said Arihiro Nagata, managing director of global investments at Sumitomo Mitsui Bank. “You can’t fight the Fed when there’s such massive easing.”

On the currency front, major currencies were little changed on the day, but the dollar headed for its best weekly gain in about a month. [FRX/]

“Delta variants are rife in countries with limited vaccination. In a way, the dollar and US assets seem to be bought as a hedge against this,” Sumitomo Mitsui’s Nagata said.

The kiwi was the biggest driver among the majors in the Asian session, and was last up 0.6% to $ 0.7020.

Gold, on the other hand, hit a one-month high at $ 1,834.3 an ounce and settled at $ 1,825.4 for the last time, supported by an accommodating Fed.

Oil prices were heading towards their biggest weekly decline since at least May as expectations of increased supply spooked investors, with OPEC likely to increase production to meet a potential upturn in demand then that more countries recover from the pandemic.

U.S. crude futures fell 32 cents to $ 71.33 a barrel, near last week’s low of $ 70.76. Brent futures slipped 35 cents to $ 73.11 a barrel.

(Additional report by Swati Pandey; Editing by Sam Holmes)

Copyright 2021 Thomson Reuters.

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