Stocks in the Asian market experienced a significant uptick as Taiwan Semiconductor Manufacturing Co. (TSMC) fueled optimism about a global recovery in the semiconductor sector. Investors eagerly awaited clues on the future steps of the US central bank, with a regional shares gauge marking its best performance in over three weeks, propelled by robust gains in semiconductor stocks. Benchmark indexes in Japan, South Korea, and Australia all recorded positive movements. TSMC, a key chip supplier to Apple Inc. and Nvidia Corp., saw a remarkable jump of more than 5% in Taiwan, following a nearly 10% surge in its American depository receipts, reaching the highest level since February 2022.
TSMC’s optimistic outlook, driven by its solid growth projections for the current quarter and expansion plans in Japan, Arizona, and Germany amid the AI development boom, triggered the most significant rally in chipmakers in over a month. This surge also pushed the Nasdaq 100 index, dominated by tech stocks, to close at an all-time high.
An Hyungjin, CEO and fund manager at Billionfold Asset Management Inc., interpreted TSMC’s better-than-expected results as positive signals for demand recovery, especially with the strong demand for artificial intelligence (AI). He noted that not only large US tech firms but tech companies globally may need to invest in AI, potentially providing a boost to stock markets.
In contrast, mainland China saw a decline in shares after a late turnaround on the previous day. US equity contracts exhibited minimal changes during Asian trading.
The bond market and the dollar experienced declines following a week of rapid reassessment of Federal Reserve interest-rate policy. The likelihood of a rate cut in March, which was nearly 80% at the end of the previous week, dropped to a coin toss, influenced by hawkish Fed commentary and resilient consumer data.
The Japanese yen remained stable despite the release of Japanese inflation data indicating a deceleration in December. This gives the Bank of Japan more reason to delay any decisions on ending its negative rate policy.
Fed Bank of Atlanta President Raphael Bostic and Philadelphia counterpart Patrick Harker expressed cautious sentiments, emphasizing the potential impacts of unpredictable events on the global stage. This ongoing disconnect between incoming data and market reactions continues to pose challenges in navigating the US rates market.
The S&P 500 showed a recent stall, hovering just below its closing record set two years ago. Goldman Sachs Group Inc. maintained a bias toward being long on risk and short on volatility due to expectations of favorable macro dynamics this year. However, they suggested considering some protection as the market closely aligns with their “benign” view.
In other markets, oil maintained stability after reaching a three-week high amid escalating tensions in the Middle East, while gold faced a weekly loss in response to the recalibration of Fed rate-cut expectations.
