Stocks
Asian markets drop with Wall St as Biden sparks fresh chip fears
Asian markets sank with Wall Street on Thursday after a warning from the White House that it would target firms supplying China with key semiconductor technology, and Donald Trump’s comments on crucial chip supplier Taiwan.
The dollar remained subdued following its latest retreat caused by growing expectations that the Federal Reserve will cut interest rates at least once this year.
Firms linked to artificial intelligence have led a surge in equities this year as investors see the sector as the next major growth area, with market darling Nvidia piling on more than 140 percent since the start of the year.
The industry has helped push the S&P 500 and Nasdaq to multiple records in the past seven months, helped by the prospect of lower borrowing costs.
But the rally took a blow Wednesday when Bloomberg News reported that Joe Biden was looking at imposing strict curbs on firms such as Tokyo Electron and ASML if they continue allowing Beijing access to their chip tech.
The report, which comes as he looks to buttress his credentials as strong on China ahead of November’s presidential election against Trump, sent shivers across trading floors, sending the Philadelphia Semiconductor Index plunging nearly seven percent — its heaviest loss since 2020.
Nvidia dived more than six percent and Dutch firm ASML collapsed more than 12 percent.
Tokyo Electron fell 7.5 percent on Wednesday and a further 9.5 percent Thursday. TSMC shed more than three percent in Taipei.
Meanwhile, Trump’s comments that Taiwan — home of the key chip-maker TSMC and other major producers — should pay the US for its defence caused some geopolitical unease.
The fear fuelled a sell-off across Asian equities, with Tokyo and Taipei down at least two percent, while there were also hefty losses in Hong Kong, Shanghai, Sydney, Seoul, Singapore and Manila.
Analysts warned that the imposition of more chip restrictions could fuel further selling and lead to a correction in markets, which some warn have become overbought.
– ‘A big currency problem’ –
Worries over tech have offset the feel-good mood that has been sparked by recent data and comments from Fed officials indicating they are ready to cut interest rates as soon as September, and possibly again before January.
The latest boost for doves came in the central bank’s Beige Book summary of the economy, which said there were signs it was slowing.
“Expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict, and inflation,” the report said.
The prospect of lower rates has weighed on the dollar, while the yen — which has been battered against the greenback this year — has won support from bets on a Bank of Japan hike in coming months.
“Markets are pricing in the Fed to start cutting rates in September, and risks of yen carry trade — the practice of borrowing low yielding currencies to invest in high yielding currencies — unwinding are building as yield gap narrows,” Saxo researchers said in a note.
“Recent comments from Trump have also hinted at concerns from US dollar strength.”
Trump, in Milwaukee for the Republican National Convention, has also weighed in on the dollar’s relative strength against the yen and yuan, telling Bloomberg Businessweek “we have a big currency problem” and “I would always notice they fought very hard to keep their currency low”.
Taylor Nugent, at National Australia Bank, said: “The comments play to the view (that) bilateral trade deficits and currency valuations are a key focus, and tariffs would be a key negotiating tool.”
Investors are keeping tabs on Beijing, where China’s leaders are expected to wrap up a key gathering, with hopes President Xi Jinping will unveil fresh measures to boost the world’s number two economy.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 2.0 percent at 40,277.86 (break)
Hong Kong – Hang Seng Index: DOWN 0.5 percent at 17,652.42
Shanghai – Composite: DOWN 0.6 percent at 2,944.67
Pound/dollar: DOWN at $1.3007 from $1.3012 on Wednesday
Euro/dollar: DOWN at $1.0938 from $1.0941
Dollar/yen: DOWN at 155.92 yen from 156.33 yen
Euro/pound: UP at 84.09 pence at 84.07 pence
West Texas Intermediate: UP 0.7 percent at $83.39 per barrel
Brent North Sea Crude: UP 0.5 percent at $85.49 per barrel
New York – Dow: UP 0.6 percent at 41,198.08 (close)
London – FTSE 100: UP 0.3 percent at 8,187.46 (close)
Asian investors trod cautiously Monday as they struggled to build on recent equity gains, with debate swirling around how big an expected US interest rate cut will be this week, while sentiment was being dragged by worries about the Chinese economy.
The yen edged to a new high since December ahead of the Federal Reserve decision on Wednesday and a policy meeting at the Bank of Japan two days later.
Data showing US inflation slowed more than expected last month to its weakest pace since February 2021 has sparked fresh talk that Fed officials will announce a bumper 50-basis-point cut and continue easing into the new year.
However, while bets on such a move have risen, some analysts warned that it could send a signal that decision-makers are worried about the economy, particularly after two readings showing the labour market was softening.
While bank officials have played their cards close to their chest, they have hinted that they are willing to discuss a bigger cut, while former New York Fed chief Bill Dudley said he thought “there’s a strong case for 50”.
Michael Krautzberger at AllianzGI said: “The Fed, like other central bankers, are now focused on economic growth rather than inflation risks and becoming increasingly worried about being behind the curve on policy — cutting rates too late to avert a recession or sharper growth slowdown.
“Therefore, in our view, the risks of larger rate cuts at subsequent meetings this year cannot be discounted, especially if labour market activity deteriorates faster than currently expected and inflation continues to head towards target.”
All three main indexes on Wall Street pushed higher Friday, with the Dow and S&P 500 within a whisker of their record highs.
But Asian investors were unable to extend the rally, with Hong Kong, Singapore and Wellington down but Sydney, Taipei and Manila edging up.
Trade was muted by holidays in Tokyo, Shanghai, Jakarta and Seoul.
On currency markets the yen hit 140.43 per dollar, its strongest level since the end of December, while gold remained at all-time highs after hitting a record $2,586.10 per ounce Friday.
Traders are keeping tabs on developments in China after more weak data on credit, retail sales, industrial production and house prices stoked concerns about the state of the world’s number two economy.
The figures “collectively add to concerns that policy measures announced in recent weeks and months have so far failed to have any measurable impact in lifting economic growth thus far in the third quarter after the weak second quarter performance”, said National Australia Bank’s Ray Attrill.
He added that investors will be keenly watching the government’s upcoming Politburo meeting — the date of which has yet to be set.
In light of the latest batch of disappointing figures, the central bank outlined plans to support the economy, saying it will “make maintaining price stability and pushing for the mild rebound in prices an important consideration for monetary policy and meet reasonable financing demand for consumption in a more targeted way”.
The Fed’s decision is set to be followed by the BoJ on Friday, with most analysts expecting it to hold rates after a surprise hike at the end of July sparked turmoil on markets.
“A consecutive hike would likely be seen as too aggressive, especially given criticism that the BoJ’s hawkish stance contributed to global market turbulence in early August,” said IG analyst Tony Sycamore.
“That said, stronger-than-expected inflation and wage growth in Japan over the past month have given the BoJ confidence in a wage-price cycle that could keep inflation above two percent, paving the way for more policy tightening.”
– Key figures around 0230 GMT –
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 17,271.92
Tokyo – Nikkei 225: Closed for a holiday
Shanghai – Composite: Closed for a holiday
Dollar/yen: DOWN at 140.53 yen from 140.76 yen on Friday
Euro/dollar: UP at $1.1088 from $1.1079
Pound/dollar: UP at $1.3141 from $1.3125
Euro/pound: DOWN at 84.37 pence from 84.40 pence
West Texas Intermediate: UP 0.5 percent at $68.98 per barrel
Brent North Sea Crude: UP 0.4 percent at $71.86 per barrel
New York – Dow: UP 0.7 percent at 41,393.78 (close)
London – FTSE 100: UP 0.4 percent at 8,273.09 (close)
Khan Brothers PP Woven Bags has raised eyebrows after a significant and unexpected surge in its share price, despite the company posting losses and not declaring dividends for the last two fiscal years, including 2022-23. Over a brief period of just 14 trading sessions, from 25 August to 15 September, the company’s stock saw an extraordinary rise of 150%, closing at Tk176.2 on Sunday.
In light of this unusual price movement, the Bangladesh Securities and Exchange Commission (BSEC) has requested the Dhaka Stock Exchange (DSE) to conduct an investigation. The BSEC noted suspicious fluctuations in both the price and trading volume of Khan Brothers’ shares and called for an inquiry to uncover possible causes, including potential market manipulation or insider trading.
The DSE is required to submit a detailed investigation report to the BSEC’s Surveillance Department within 30 working days. Furthermore, the exchange has been directed to alert its AR/Compliance Officer or CEO of any irregular trade activities that may point to violations of securities regulations.
This is not the first time Khan Brothers’ shares have seen a steep rise. Earlier this year, in mid-February, the stock price surged to Tk231 before dipping below the face value of Tk10 by April. On 25 August, the shares traded at Tk78.4, only to climb again and hit Tk176.50 on Sunday, representing a 5.94% increase, or Tk9.9 per share.
Despite the sharp rise, the company reported a loss of Tk20 lakh during the first nine months of the 2023-24 fiscal year. Previously, the DSE issued query notices regarding the stock’s rising price on 10 July and 1 September. The company responded that no undisclosed price-sensitive information existed to explain the surge.
Khan Brothers PP Woven Bags Industries, which went public in 2014, raised Tk20 crore through its listing to fund machinery purchases, building construction, and debt repayment.
Dhaka Stock Market DSE, Bourse on the first working day of the week, 15th September, ended with a mixed performance in Indices and hike in Turnover from the previous working session. This information is known from DSE sources.
668 crore 95 lakh taka shares were traded on this day. 64 crore 43 lakh less tradings were done in DSE today compared to the previous workday, 12th September, Shares worth Tk 733 crores 39 lakh shares were traded last time, Thursday.
The benchmark DSEX lost 14.74 points or 5,726 The Shariah-based index DSES gained 1 point or 1,246 and the blue-chip index DS30 decreased by 15.22 points or 2,085.
Of the issues traded, 169 advanced, 182 declined and 46 remained unchanged.
SK Trims & Industries Limited ranked top gainer on DSE, the share price increased by Tk 1.70 paisa or 10.00 percent. On this day, the share was last traded at Tk 18.70 paisa.
Trust Bank 1st Mutual Fund ranked top loser on the DSE, the unit price dropped by Tk 0.40 paisa or 9.30 percent. On this day, the unit was last traded at Tk 3.90 paisa.
DSE topped on trade is Linde Bangladesh Limited 42 crore 32 lakh takas of company shares have been traded.
A total of 32 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 69 lakh 16 thousand 672 shares of the companies were traded. The financial value of which is 37 crore 43 lakh taka.
