EQUITIES: Asian Equities Mostly Lower Ahead of Key US Data Friday
Asian equities are lower today, with declines in Japan, Australia & Taiwan, while China & Hong Kong trade mixed. Concerns ahead of key US jobs data and China's consumer price report have added to caution. Japanese equities fell for a second day as global semiconductor weakness weighed on chipmakers like Tokyo Electron, while rising bond yields hit real estate and utilities. Australia’s ASX 200 dropped 0.6%, snapping a five-day winning streak, as financials and materials dragged the index.
- The Biden administration plans to impose new restrictions on AI chip exports to limit access for adversaries like China and Russia while fostering AI development in allied nations. The regulations establish three tiers of chip access, with Tier 1 countries (like the US, Japan, and Germany) enjoying the fewest restrictions, while Tier 3 nations face broad prohibitions. Companies can bypass certain limits by meeting strict US security and human rights standards through a validated end-user program. Nvidia and industry groups oppose the move, arguing it risks stifling economic growth and US leadership in AI. Asian Semiconductor stocks are mixed in early morning trading, with the BBG Asia Semiconductor Index up 0.15% largely in part to a 4.75% jump in SK Hynix while SKC shares surged 15% in South Korea after speculation of a glass substrate supply deal with Nvidia.
- Foreign Investors have been better buyers of South Korea equities today, with a net inflow of $165m, with the majority of those flows heading into Tech stocks.
- APAC markets: Japan's Nikkei is -0.80%, TOPIX -0.85%, Hong Kong's HSI +0.40%, China's CSI 300 is flat, Taiwan's TAIEX is-0.40%, South Korea's KOSPI is +0.40%, Australia's ASX200 -0.60% and New Zealand's NZX 50 is -0.65%
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
China's Investment Potential Remains Substantial - NDRC Official
China’s potential investment in green transformation and industrial upgrading remains substantial, especially in quantum technology, artificial intelligence and aerospace, said Zhao Chengfeng, deputy director of the investment department at the National Development and Reform Commission, Xinhua News Agency reported. Meanwhile, high levels of water conservancy investment are needed given flood disasters, while urban underground pipeline renovations to improve gas, water and heating supply need about CNY4 trillion investment over the next five years, said Zhao.
China November CPI Impacted By High Temperatures
China’s lower than expected November CPI print of 0.2% y/y was mainly due to high temperatures and a strong rebound in the supply of fruit and vegetables, according to Wang Qing, chief macro analyst at Orient Securities. Looking ahead, Wen Bin, chief economist at China Minsheng Bank, said CPI would be supported by higher seasonal winter demand for meat, while temperature drops may affect the production and storage of fresh food. CPI may also rise as incremental policies continue improving domestic demand and consumer confidence, Wen added.
AUSTRALIA DATA: NAB Business Survey Points To Another Weak Quarter
November NAB business survey came in weak with conditions down to 2.4 from 7.2, the lowest since end-2019 outside of Covid. Confidence fell to -2.8 from +5.3. There was weakness across components but cost pressures picked up while final product prices remained in line with the historical average. The data is suggesting another soft quarter, but little further progress on inflation. The RBA is widely expected to leave rates at 4.35% later today.
Australia NAB business conditions & outlook
- Labour cost growth remained at 1.4% 3m/3m but purchase costs increased to 1.1% from 0.9% but still below this year’s average. Final product prices rose at 0.6%, unchanged from October, but retail prices eased to 0.6% from 1.1%.
- Capacity utilisation remains above the series average implying that inflation pressures will only come down slowly.
- The RBA has been concerned about services inflation and NAB reported that services conditions were higher.
Australia NAB price/cost components
Source: MNI - Market News/Refinitiv
- Employment moderated to 2.5 from 3.3 but remains above the low for 2024. November jobs data print Thursday and the unemployment rate is forecast to rise 0.1pp to 4.2%.
- Profitability fell to -0.8 in November from +5.2, the first negative since January 2022. Q3 profits fell again driven by the mining sector and that seems to have continued in Q4 given softer commodity prices. Trading fell to +5.4 from +13, the lowest since pandemic-impacted 2020.
- Forward-looking orders fell to -4.8 from -3.0, but remain in line with the 2024 average. The drop was driven by mining and retail. Exports also deteriorated.
