Asia Stocks Mixed, Semiconductors Hit On Biden's Trade Restrictions

Asian equities are mixed today, the moves have been driven by optimism that the Federal Reserve will soon cut interest rates with the markets now pricing a 100% chance of a cut in September, leading to a surge in riskier market segments. The MSCI Asia Pacific Index rebounded from a three-day decline, buoyed by fresh highs in U.S. shares, although gains were moderated by sell off this afternoon in Japanese stocks following U.S. warnings of stricter trade rules with China. Despite geopolitical concerns over a potential Trump presidency, the overall sentiment was positive, with rising expectations for rate cuts and supportive economic data boosting confidence.

• Japanese equities are off earlier highs after reports that the Biden administration is considering stringent trade restrictions on companies like Tokyo Electron if they continue providing advanced semiconductor technology to China. Tokyo Electron which makes up about 2.80% of the Nikkei 225 dropped as much as 7.6%, with the weakness confined to the chip sector. However, the broader market remained focused on the positive prospects of U.S. interest rate cuts and a potential economic soft landing. The Nikkei 225 is 0.25% lower, while the wider Topix is 0.38% higher.
• South Korean stocks are lower today as investors have looked to take profits after two days of gains. Major tech and automotive stocks like Samsung Electronics and Hyundai Motor saw declines. Conversely, SK Innovation surged 7.15% on merger news, while Korean shipbuilder stocks have surged to multi-year highs driven by expectations of strong second-quarter earnings and US industrial gains amid rate-cut bets. The Kospi is 0.60% lower, while the Kosdaq trades 0.50% lower.
• Taiwan equities are lower this morning, recently foreign investors have been heavy sellers of Taiwan equities with an outflow of $2.2b over the past week, the TWD is weaker on the back of this selling and currently sits back near two week lows. TSMC is also lower after Biden announced potential tariffs on semiconductors names and Trump questioning if it's the US duty to protect Taiwan. The Taiex is 1.23% lower.
• Australian equities are higher today, and mirror the rally in US equities overnight. The ASX200 is up 1% and is back above 8,000. Miners led the gains, supported by gold reaching its highest price ever and details from BHP’s quarterly production report.
• New Zealand equities are higher today, after Q2 headline CPI came in moderately lower than expected at 0.4% q/q with the annual rate easing to 3.3% from 4%. Overnight GDT price index rose 0.40%, with strong performance in "fats" which offset a fall in "powders". The NZX 50 is up 0.76%
• Elsewhere, Singapore equities are 0.10% higher, Malaysian equities are 0.65% higher, Indonesian equities are are little changed while Philippines equities are 0.50% lower.