EBC Markets Briefing | Nikkei 225 craters amid chipmaker rout

Asian semiconductor stocks tumbled Thursday, even after Trump said Iran wants to meet and make a deal. He added that forces would go on to target key Iranian infrastructure next week without a diplomatic breakthrough.

The US persisted with military strikes on Iran following the reinstatement of a naval blockade on its ports, triggering a warning from Tehran of an impending "existential war" with America.

Wall Street rose as investors shifted from semiconductors into Magnificent Seven stocks and banks following strong bank earnings, but Asia faces greater vulnerability due to higher chip sector exposure.

Foreign net outflows from Japanese equities accelerated to ¥22.2 billion in the week leading up to 3 July, indicating a sharp deterioration in overseas demand. Many traders are looking for defensive tactics.

Nearly half of Japanese firms are suffering negative impacts from the BOJ's interest rate hikes, according to a Reuters survey. Higher borrowing costs are hurting profit margins and dampening capital investment.

A majority of those firms view the weak yen negatively due to rising import costs amplified by the US-Israel-Iran war's impact on oil prices, while a third benefit from boosted export earnings.

EBC Financial Group analyst says, the Nikkei 225 has entered a structural correction phase since late June. A decisive break below the 50 SMA support would expose 65,000.

Asset recap

As of market close on 15 July, among EBC major products, PayPal Holdings shares led gains on a report that Stripe and private equity firm Advent International have made a joint offer to acquire the fintech company.

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Progressive Corp reported stronger-than-expected Q2 earnings, supported by continued premium growth and higher investment gains. Still analysts are concerned about margin squeeze and rising insurance claims.

South Korea market fell as chipmakers stumbled ahead of results from bellwether TSMC, while bonds benefited from another benign reading on US inflation that lessened the risk of an ‌imminent rate hike.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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