Investing.com — Japanese stocks rallied back to a 33-year high on Friday, outpacing their Asian counterparts amid heightened optimism about chipmaking stocks, while Chinese markets lagged as investors worried about slowing economic growth and deteriorating relations with the United States.
Broader Asian stocks also fell on anticipation of more hints of the US debt ceiling and potential default.
It rose 0.6% and was trading just below 33-year highs hit earlier this week, after positive earnings from US chipmaker NVIDIA Corporation (NASDAQ:) boosted local stocks exposed to the ‘business. Nvidia said increased interest in artificial intelligence will fuel chip demand this year.
The larger added 0.2%, also returning to 33-year highs.
Manufacturer of semiconductor test equipment Advantest Corp. (TYO:) jumped 5.1% to a record high, while chipmakers Tokyo Electron Ltd. (TYO:) and Screen Dainippon Mfg. Co., Ltd. (TYO:) jumped 6% and 9%, respectively.
Japanese equities also benefited from a weaker than expected , which could herald further weakness in domestic inflation and keep the Bank of Japan dovish.
Nvidia’s optimism spilled over into other chip-heavy indexes. The index rose 1.2%, buoyed by gains from TSMC (TW:), while South Korea edged up 0.2% on the strength of Samsung Electronics Co Ltd (KS:) and SK Hynix Inc (KS:).
But on the other hand, China and the indices fell 0.4% and 0.1%, respectively. Both are expected to lose nearly 3% this week as concerns over deteriorating relations between Washington and Beijing have rattled sentiment towards Chinese markets.
China’s ban on local sales by US chipmaker Micron Technology Inc (NASDAQ:) this week has raised fears of a renewed trade war between the two countries, although US officials have said the move will not had not “torpedoed” relations.
Rising COVID-19 cases and slowing economic growth have also kept investors wary of China, with a new outbreak expected to peak in late June. Weak economic indicators in April showed the country’s growth was slowing despite the lifting of anti-COVID measures earlier this year.
Broader Asian markets were subdued as the focus remained on negotiations to raise the US debt ceiling and avoid a default. Negotiations were underway ahead of a June 1 deadline for a U.S. default, though lawmakers gave little indication that a deal was imminent.
A default is likely to lead to a recession in the United States and could have disastrous consequences for the global economy. This, coupled with a , has limited the appetite for high-risk stocks.
Australia’s index was flat, while it led losses across Southeast Asia with a 0.8% drop.
