Strong U.S. Chip Stocks Lift Asia-Pacific Tech Sentiment; Japan and South Korea Indices Diverge

TradingKey - April 24: Yesterday, the three major U.S. stock indices were under pressure, but the strong performance of chip stocks drove an improvement in sentiment for related Asia-Pacific tech stocks, while Japanese and South Korean indices showed mixed performance.

The Nikkei 225 Index opened higher and trended upward in the morning, with gains gradually expanding in the afternoon, closing up 0.97% for the day at 59,716.11 points. The index reached a session high of 59,763.68 points and a low of 59,225.37 points.

In terms of sectors, semiconductors, data centers, and electrical equipment were among the top gainers, while the securities, real estate, and oil sectors led the declines.

Among heavyweight stocks, Advantest rose 5.52%, SoftBank gained 2.16%, Mitsubishi Corp rose 3.3%, and Fast Retailing rose 1.15%; on the downside, Canon fell 7.9%, Yamaha dropped 6.41%, Ricoh Group declined 3.93%, and Sony shed 1.69%.

Abhijit Surya, Senior Asia-Pacific Economist at Capital Economics, stated that the Bank of Japan could raise interest rates as early as June. The firm believes that while the BoJ may keep interest rates unchanged at next week's meeting, the board might send hawkish signals by upwardly revising its headline and core inflation forecasts. In addition, the BoJ may once again emphasize the risks of rising inflation expectations, 'especially because some corporate inflation expectation indicators in the Tankan survey have begun to exceed the (central bank's) 2% target level.'

South Korea's KOSPI Index fluctuated at high levels and closed nearly flat today, down slightly by 0.18 points. It fell by more than 1% at one point before rebounding to close at 6,475.63 points. Among heavyweight stocks, Hyundai Motor fell 3.57%, Samsung Electronics dropped 2.23%, and LG rose 3.11%.

South Korea's SK Hynix on Thursday reported a 406% surge in quarterly profit, as the AI boom fueled strong demand for advanced and legacy memory chip products. The Nvidia supplier reported an operating profit of 37.6 trillion won ($254.2 billion) for the January-March period, up from 7.4 trillion won in the same period last year, matching analysts' forecasts of 37.9 trillion won.

Jung Chung-rae, leader of South Korea's ruling Democratic Party, said on Friday that the Korean stock market is entering an era where the so-called 'Korea Discount' is eliminated and a 'Korea Premium' is achieved. Given that the P/B ratio of the South Korean stock market is still below the OECD average, Jung stated at a party meeting that the KOSPI will not stop at 6,500 points but will continue to rise to 7,000 and 8,000 points.

Overall, Asia-Pacific stock markets today were still primarily driven by the recovery in tech sector sentiment. Furthermore, the reduction in market concerns over the situation in the Middle East also benefited the broader market.