Global shares dipped yesterday after Wall Street took a step back from its big rally as markets tried to digest a slew of earnings.
Investor optimism was also hurt by Fitch Ratings downgrading the US government’s credit rating, citing a growing federal debt burden and an “erosion of governance” that has manifested in debt limit standoffs.
The rating was cut on Tuesday one notch to “AA+” from “AAA,” the highest possible rating.
Photo: EPA-EFE
In 2011, ratings agency Standard & Poor’s stripped the US of its prized “AAA” rating.
The move follows a long, drawn-out row between Republicans and Democrats earlier this year over raising the US borrowing ceiling, which had fueled fears of a devastating default by the world’s top economy.
While a deal was eventually struck, the saga rattled markets and reinforced the sense of long-running deadlock on Capitol Hill that has seen the gears of government jammed up.
US Secretary of the Treasury Janet Yellen said the move by Fitch was based on outdated data, adding that the US economy has rapidly recovered from the COVID-19 pandemic recession.
“Some negativity was permeating across Asian equity markets mid-week thanks to Fitch downgrade news. Whilst not a game-changer, news that Fitch downgraded the US credit rating by a notch was enough to put risk appetite on the back foot, as evidenced by the red numbers across the board,” KCM Trade chief market analyst Tim Waterer said.
Shares in Taipei fell 1.85 percent as profit-taking added to the selling of artificial intelligence (AI)-concept stocks, with the TAIEX ending down 319.14 points at 16,893.73.
As investors pocketed recent gains amid the AI frenzy, Wistron Corp (緯創) lost 10 percent, Quanta Computer Inc (廣達) dropped 9.92 percent, Wiwynn Corp (緯穎) declined 9.86 percent and Lite-On Technology Corp (光寶科技) fell 9.74 percent, Taiwan Stock Exchange data showed.
Elsewhere in Asia, Japan’s benchmark Nikkei 225 slumped 2.3 percent to finish at 32,707.69. Australia’s S&P/ASX 200 fell 1.3 percent to 7,354.60. South Korea’s KOSPI slid 1.9 percent to 2,616.47. Hong Kong’s Hang Seng dipped 2.5 percent to 19,517.38, while the Shanghai Composite lost 0.9 percent to 3,261.69.
In Europe, France’s CAC 40 fell 1.3 percent to 7,311.42 in early trading, while Germany’s DAX dipped 1.4 percent to 16,007.22. Britain’s FTSE 100 dropped 1.8 percent to 7,531.78.
Still, SPI Asset Management managing partner Stephen Innes said the outlook was positive.
“While debt downgrades seldom, if ever, have long legs, investors may pause and let the dust settle before re-entering risk markets,” he said in a note.
“However, within this super market-friendly environment of stable growth and a Fed close to the end of its hiking cycle creating fertile ground for stock gains, it’s unlikely risk sentiment will wander too far off the soft landing path,” he wrote, referring to the US Federal Reserve.
Additional reporting by staff writer and AFP
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS