Asian Stocks Slide Amid US-China Trade War Concerns

Asian stock markets experienced a broad decline on Friday, fueled by persistent worries over a potential trade war between the U.S. and China. The technology sector led the losses, despite positive earnings from TSMC, as investors continued to rotate out of tech stocks and into economically sensitive sectors.

Key Takeaways:

• Trade War Fears Weigh on Markets: Recent media reports suggesting stricter U.S. trade restrictions against China, particularly in the technology and chipmaking sectors, have reignited concerns of a renewed trade war. This negative sentiment, coupled with speculation about a second Donald Trump presidency, dragged down Chinese stocks, although promises of supportive policies from the Chinese government provided some relief.
• Tech Rout Persists: Technology-heavy indexes were the worst performers in Asia, as the sector faced profit-taking and a shift in investor focus towards economically sensitive sectors due to expectations of interest rate cuts. Japan’s Nikkei 225 and Hong Kong’s Hang Seng index suffered losses, while South Korea’s KOSPI fell 1.5% due to declines in chipmaking stocks.
• TSMC Earnings Beat Fails to Lift Chipmakers: Despite Taiwan Semiconductor Manufacturing (TSMC) reporting stronger-than-expected earnings and upgrading its outlook on robust AI demand, chipmaking stocks remained under pressure. TSMC’s Taipei shares fell 2%, partly due to comments from U.S. Republican presidential candidate Trump regarding Taiwan’s defense contributions.
• Broader Asian Markets Decline: The overall mood in Asian markets remained dour, with concerns over China dragging down Australia’s ASX 200 index by 1.1%. Japanese stocks also fell, with the TOPIX index declining 0.6% after softer-than-expected consumer price index data raised doubts about a potential Bank of Japan rate hike.
• India’s Nifty 50 Poised for Positive Open: Futures for India’s Nifty 50 index indicated a positive start, as the index approached a record-high 25,000 points.

Conclusion:

Asian stock markets faced a challenging day on Friday, with the technology sector leading the decline amid renewed trade war concerns between the U.S. and China. Despite positive earnings from TSMC, chipmaking stocks continued to struggle. Broader Asian markets also retreated, reflecting the cautious sentiment among investors. However, Indian markets showed resilience, with the Nifty 50 poised for a positive open.