Asia report: Semiconductor sector leads markets higher across region

Stock markets were higher across the board in Asia on Tuesday, with semiconductor plays in particular focus following stronger-than-expected earnings from US firm Micron overnight.

In Japan, the Nikkei 225 jumped 2.08% to 28,517.59, as the yen weakened 0.08% against the dollar to last trade at JPY 113.70.

It was a positive day for the benchmark’s major components, with robotics specialist Fanuc up 2.72%, Uniqlo owner Fast Retailing adding 2.69%, and technology giant SoftBank Group 1.1% firmer.

Chip manufacturers were also in the green, with Advantest up 4.61% and Tokyo Electron jumping 4.4%, after Idaho-based memory and storage manufacturer Micron Technology posted better-than-expected quarterly earnings after the close on Wall Street on Monday.

The broader Topix index advanced 1.47% by the end of trading in Tokyo, closing at 1,969.79.

On the mainland, the Shanghai Composite was ahead 0.88% at 3,625.12, and the smaller, technology-centric Shenzhen Composite was 1.05% firmer at 2,504.33.

South Korea’s Kospi was 0.41% higher at 2,975.03, while the Hang Seng Index in Hong Kong was up 1% at 22,971.33.

The chip-focussed technology stocks were in the green in Seoul, with Samsung Electronics up 1.3% and SK Hynix jumping 3.32%.

Hong Kong-traded semiconductor play SMIC was ahead 1.66% by the end of trading in the special administrative region.

In economic data, 20-day exports in Korea slowed to 20.0% year-on-year in December, from 27.6% in November, pointing to a softening of external demand at the end of the year.

Exports to the United States accelerated on a year-on-year basis to 19.4% in December from 8.9%, and also gained month-on-month to a seasonally-adjusted 4.3%, after a 2.3% decline in November.

Pantheon Macroeconomics’ Craig Botham said that signalled some easing of bottlenecks, although it was still a “very volatile” data series.

“Focusing instead on the quarter-on-quarter seasonally adjusted rate, there is a slowdown in exports to the US, as well as the rest of the world, China included,” Botham said.

“Trade activity looks to have weakened at year-end.

“Scant comfort can be drawn from the limited data on exports by product, where the decline was broad-based.”

Vehicles, ships, petroleum, and semiconductors all saw a slowdown in year-on-year terms, Botham added.

“Semiconductors at least only posted a modest deceleration, to 27.5% year-on-year from 32.5% in November.

“Some supply constraints remain in place.”

Oil prices were higher as the region went to bed, with Brent crude last up 1.06% at $72.28 per barrel, and West Texas Intermediate rising 1.36% to $69.54.

In Australia, the S&P/ASX 200 was 0.86% higher at 7,355.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.71% to 12,856.87.

The down under dollars were both stronger on the greenback, having earlier tanked against the dollar, with the Aussie last ahead 0.34% at AUD 1.4014, and the Kiwi advancing 0.59% to NZD 1.4808.