ASIA STOCKS: Trump Targets Semi Conductors and Pharma (amended)
The Trump administration is seeking to become more self sufficient in the production of semiconductors rather than being reliance on semiconductors made overseas, hoping to spur domestic manufacturing and reshape global supply chains (as reported in WSJ) This comes as the US announced Friday that 100% tariffs will be levied on pharmaceutical products, seemingly targeting China and India. The semi-conductor news saw the likes of TSMC down -1.50% and Samsung -4.30% whilst Pharma companies in India. Market leaders like Dr. Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma derive between 30-50% of their overall revenues from the American market with some down 3-4% this week.
- China's key bourses have had a weak end Friday, falling across the board. The HSI is down -0.65% and is down -0.87% for the week. The CSI 300 is down -0.42% but up +1.60% for the week, Shanghai down -0.18% but up +0.69% for the week and Shenzhen down -0.56% but up +0.91% for th week.
- Having hit new highs earlier in the week, the NIKKEI gave back today with falls of -0.46%. It remains however up 0.55% for the week, having hit a new high of 45,754.
- The TAIEX in Taiwan got dragged lower by TSMC and the semi conductor sector in general and is down -1.95% today, wiping out earlier weekly gains to be down -0.21%.
- The KOSPI has been hit hard by the semi conductor sector falls and is down -2.9% today, wiping out all of the gains for the week.
- The FTSE Malay KLCI has done very little all week yet has eked out gains of +0.45% today.
- The Jakarta Composite is up +0.38% today and +0.25% despite the challenges for the currency.
- The NIFTY 50 has opened Friday down -0.40% and is down -2.2% for the week.
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BUND TECHS: (U5) Resistance Remains Intact
- RES 4: 130.26 High Aug 8
- RES 3: 130.06 High Aug 14
- RES 2: 129.78 50-day EMA
- RES 1: 129.55 High Aug 21 and 22
- PRICE: 129.45 @ 05:49 BST Aug 27
- SUP 1: 128.64 Low Aug 15
- SUP 2: 128.40 Low Apr 9
- SUP 3: 128.19 Low Mar 27 (cont)
- SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)
Bund futures continue to trade above their recent lows. A bear threat remains present. The contract recently breached 128.84, the Jul 25 low and a bear trigger. Note that the 129.00 handle represents the base of a broad range. A clear range breakout would strengthen a bearish theme. This would open 128.40 initially, the Apr 9 low. Strength above the 50-day EMA of 129.78, is required to signal a reversal.
ASIA STOCKS: Strong Day of Gains for Major Regional Bourses
The recent uptrend for China's stocks continued today with major bourses delivering gains as markets turn their attention to Nvidia's earnings and the US inflation report to come. Tech shares in the region remain strong with key AI companies in focus.
- The NIKKEI is up +0.29% today, attempting to recover from yesterday's falls of nearly 15.
- In China, whilst the Hang Seng hovered around where it opened, the onshore offshore divide continues with the CSI 300 up +0.72%, Shanghai up +0.33% and Shenzhen one of the best regional performers up +0.80%.
- The TAIEX in Taiwan rose +0.74% to mark three days of gains of just over 3%.
- The KOSPI ignored better than expected retail sales and ahead of the BOK decision is only marginally higher on the day.
- In South East Asia, the FTSE Malay KLCI is flat, whilst the Jakarta Composite is up +0.30%.
- In the Philippines, the PSEi is one of the best regional performers ahead of the BSP decision, up +1.3%.
- The NIFTY 50 in India is closed, having finished yesterday down heavily by -1%,
OIL: Crude Holding Onto Tuesday’s Losses As Watching Developments
Oil prices are little changed in today’s APAC session following a sharp sell off on Tuesday. WTI is around $63.25/bbl after falling to $63.15 and reaching $63.46 early in trading. Brent is 0.1% higher at $67.26/bbl off the intraday low of $67.13. The USD index is 0.2% higher.
- US 25% punitive tariffs on India came into effect today because it continues to purchase Russian oil. It has not been put off by the threat and likely believes that duties will be delayed or withdrawn. There are concerns that global supplies will be materially impacted if they are extended to China and enforced. Progress on negotiating a Ukraine peace appears to have stalled.
- Bloomberg quotes sources that Indian refiners plan to buy 1.4-1.6mbd for delivery from October down from H1’s 1.8mbd.
- Bloomberg reported that US crude inventories fell 1mn barrels last week, according to people familiar with the API data. Products were also lower with gasoline down 2.1mn and distillate 1.5mn. The official EIA data is out today.
- Later the Fed’s Barkin repeats comments previously given. The data calendar is light with only September German GfK consumer confidence of note. Markets are waiting for US PCE price data on Friday.
