Germany is leading the biggest rally in global bond markets since March’s banking rout as cooling inflation and a weakening economy suggest European Central Bank rate hikes are nearing an end. Borrowing costs, or bond yields, in the benchmark euro area issuer are down at least 20 basis points (bps) this week. Alongside British and U.S. peers, yields – which move inversely to bond prices – were set for their biggest weekly declines since mid-March…
Asian Stocks Drop Amid Default Fears, Nvidia Boosts Chipmaking Shares
Most Asian stocks fell on Thursday as fears of a U.S. debt default persisted amid little progress toward raising the debt ceiling, although chipmaking stocks outperformed tracking a robust outlook from Nvidia. Japan’s Nikkei 225 index rose 0.6%, supported chiefly by nearly 16% jump in semiconductor testing equipment maker Advantest Corp (TYO:6857). The stock, which ranks Nvidia among its clients, was trading at a record high of 16,280 yen. Gains in other chipmaking stocks, such as wafer maker SUMCO Corp (TYO:3436) and Tokyo Electron Ltd (TYO:8035), helped the Nikkei move back towards 33-year highs after some losses this week. Nvidia Corporation (NASDAQ:NVDA) rallied in overnight trade after the graphics cards maker beat expectations with its first-quarter earnings and forecast stronger revenue on robust demand from artificial intelligence development. The positive outlook from Nvidia brightened the outlook for the chipmaking sector, which is otherwise grappling with a potential demand slowdown in the face of worsening global economic conditions. This benefited other chipmaking stocks, with South Korea’s Samsung Electronics Co Ltd (KS:005930) up 1%. Taiwan Semiconductor Manufacturing Co (TW:2330), which is also a major Nvidia supplier, jumped nearly 3%, helping the Taiwan Weighted index rise 0.6%. But broader Asian markets retreated, tracking a weak lead-in from Wall Street as U.S. lawmakers flagged slow progress in negotiations over raising the debt ceiling. Sentiment was also rattled by ratings agency Fitch flagging a potential U.S. credit downgrade in the event of a default.
Concerns Over a Renewed COVID Wave In China Also Battered.
regional stocks, as the Chinese government warned that a new outbreak could peak by late-June. While the symptoms from the new COVID variant are mild, markets feared further disruptions in a Chinese economic recovery, which already appeared to be slowing in April. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell about 0.5% and 0.7%, respectively, while Hong Kong’s Hang Seng index plummeted 1.9%. Orient Overseas International Ltd (HK:0316) was the worst performer on the Hang Seng, down over 6% as a row with bankrupt home goods retailer Bed Bath & Beyond heated up. Other China-exposed markets also retreated, with Australia’s ASX 200 down 0.9% as losses in commodity prices dented local mining heavyweights. South Korea’s KOSPI fell 0.4%, while the Philippine Composite Index fell 0.3%. Investors remained largely wary of risk-heavy assets amid increasing fears of a U.S. default, which could trigger a recession and have devastating consequences for the global economy.