by Tom Westbrook
SINGAPORE (Reuters) – Asia’s stock markets declined on Friday as tech shares slid as China-U.S. tensions deepened, while the dollar looked set to seal its longest winning streak in nine years as investors braced for U.S. bonds. Interest rates were set to remain high for a long time.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2% in early trade and is down 1.4% for the week. Hong Kong markets remained closed in the morning due to the typhoon that hit the city. Japan’s Nikkei fell 0.8%.
Apple’s market capitalization has been wiped off nearly $200 billion in two days as reports of China cracking down on iPhone use by state employees and fears of protectionism were weighing on shares of chip suppliers in Asia on Friday .
Shares of Taiwan’s TSMC, a major supplier to Apple, fell 1% at the open. Shares of South Korea’s SK Hynix, whose chips some users have found in new phones from China’s Huawei Technologies, fell as much as 4.5% to a two-week low.
Shares of Tokyo Electron fell 4.3%. [.KS][.T]
Capital.com analyst Kyle Rhoda said, “China’s partial ban on Apple products has put the trade war and US-China estrangement back on the agenda.” “The ban is limited in scope…however, it highlights the two-way costs and risks of de-coupling.”
Shares of US suppliers tumbled overnight and helped drag the S&P 500 down 0.3% and the Nasdaq down 0.9%. S&P 500 futures were flat in Asia on Friday.
The selloff came even as tech stocks were under additional pressure from US yields rising on conditions that US interest rates are likely to remain at 20-year highs.
That in turn has boosted the dollar, which is up for an eighth straight week against a basket of currencies, a rally that has pushed the US currency index higher by more than 5%.
The dollar’s gain has pushed the Chinese yuan to a 16-year low and the yen’s decline has raised rhetoric from Japanese policymakers growing uneasy.
Analysts at ANZ Bank said, “Given the challenges facing China and signs of re-strengthening in the US jobs market, it is not surprising that the dollar is finding support, giving the ‘dollar juggernaut’ its fiercest momentum. Getting permission to continue with the protest.” A Comment.
The euro is down 0.5% this week and is trading steady at $1.0715 in Asia, with investors believing the euro is more likely to sustain than a hike from the European Central Bank next week.
The yen has hit a new 10-month low and is trading near 150 at 147.13 per dollar, where traders see a higher risk of authorities taking a move in support.
Japan’s top currency diplomat Masato Kanda said on Wednesday that officials would not rule out any option to clamp down on “speculative” moves, while Chief Cabinet Secretary Hirokaji Matsuno said the government was “readily watching”.
The Australian dollar is down more than 1% this week and was trading at $0.6384 on Friday. The benchmark 10-year US Treasury yield rose 5.5 basis points to 4.22% this week. The two-year yield has moved up 6.6 bps to 4.93%.
Brent crude prices edged higher this week, but weak demand indicators in Europe and China capped gains on recent strong US data. Brent futures were steady at $89.60 a barrel, up 1.2% this week.
(Additional reporting by Heekyeong Yang in Seoul; Editing by Mr Navaratnam)
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