Equities Lower As Concerns Linger Around US Trade Restrictions

Asian markets are lower today, the moves are a continuations from a decline in US equities overnight and persistent concerns about economic weakness, while the market is also disappointing in a lack of any real policy announcement out of the Third Plenum. The MSCI is on track for its largest fall in almost three months, local Asian currencies have all fallen verses the USD. Chip stocks continue the recent sell off as concern lingers around the US imposing fresh restrictions on companies selling products to China. TSMC earnings beat estimates, although has fallen for a third straight day.

• Japanese equities are mixed early, with tech stocks showing some signs of a rebound while cyclical stocks slide on soft US jobs data. Disco corp fell over 4% after 1Q operating income loss, the company manufacture products used in the process of making semiconductor and other electronic products, which contributed the most to the 0.50% fall in the Topix. Tokyo Electron which posted it's largest two day drop since 2015 has rebounded 2.20% this morning, although the Nikkei 225 is trading 0.30% lower. Earlier, Japan June National CPI was a touch below market expectations with headline rising 2.8% y/y, vs 2.9% est, the market is now pricing in a 40% chance of a hike on July 30th, down from 50% chance on Thursday.
• South Korean equities are lower this morning, the KRW is on track for its biggest weekly drop in more than a month as foreigner investors continue to dump local stocks. The sell-off in stocks is largely due to comments from Biden Administration around tougher trade restrictions on companies that use any US technology in products they sell to China. The Kospi is 1.44% lower, while the small-cap Kosdaq is trading 0.25% higher implying the losses are constrained to the larger tech names such as Samsung (-2.75%) and Sk Hynix (-1.40%).
• Taiwan equities are lower today, with TSMC down 2.39% despite strong second-quarter results and an increased full-year revenue forecast and is now on track for the third consecutive day. Foreign investors have been dumping local stocks at the fastest rate this year, this has also impacted the TWD which is about 0.45% lower today. The Taiex is currently down 1.80%.
• Australian equities are lower today with miners the worst performing sector, with the ASX 200 trading 1% lower. Banking watchdog APRA has agreed to reduce the amount of capital Westpac must hold in reserve by $500 million in response to the lender's improved risk management, per ABC. New Zealand Equities are 0.60% lower.
• In EM Asian markets, Indonesian equities are 0.70% lower, Singapore equities are 0.80% lower while Malaysian equities are 0.20% higher and Philippines equities are 1.40% higher.