Asian stocks led by Japanese tech equities strength. On Friday, Japanese equities move forward towards from a 33-year peak.

Asian stocks generally muted by US debt ceiling uncertainty

Chinese markets trailed as traders worried about sluggish economic growth and deteriorating U.S. ties. Whereas Japanese equities advanced near a 33-year top on Friday, beating their Asian counterparts.

In expectation of further clues about the U.S. debt ceiling and a probable default, broad Asian equities also slightly declined.

After favorable earnings from American chipmaker NVIDIA Corporation (NASDAQ: NVDA) bolstered domestic equities.  The Nikkei 225 gained 0.6 percent and traded near the 33-year peaks achieved earlier this week. This year’s demand for chips will be driven by rising interest in artificial intelligence, according to Nvidia.

Semiconductor companies shine

The larger TOPIX increased 0.2% and returned to 33-year heights.

Advantest Corp. (TYO:6857), a manufacturer of semiconductor testing equipment, increased by 5.1%. Reaching an all – time high, While, chipmakers Tokyo Electron Ltd. (TYO:8035) and Dainippon Screen Mfg. Co., Ltd. (TYO:7735) saw increases of six percent and nine percent, accordingly.

Another weaker-than-expected inflation report for Tokyo helped Japanese markets as well. This might signal a further drop in national inflation while remaining the BoJ dovish. 

Nvidia-related confidence spread across other chip-heavy indices. The TSMC (TW:2330) advances helped the Taiwan Weighted index increase by 1.2%.  And Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) enabled the KOSPI in South Korea increase by 0.2 percent.

Chinese equity indices fall on US and China trade war indications

Shanghai Shenzhen CSI 300 and Shanghai Composite indices in China, on the contrary hand, had declines of 0.4% and 0.1%. As worries about the worsening ties between US and Beijing dented attitude towards Chinese markets. The two were expected to fall nearly 3 percent this week.

Fears of a fresh trade war among the two nations increased this week when China banned local selling by the American chipmaker Micron Technology Inc (NASDAQ:MU). However, American officials insisted that the decision would not “hurt” relations.

Investors were fearful of China due to growing COVID-19 cases and sluggish economic development.  And a fresh epidemic was expected to climax by June’s end. Despite the relaxation of anti-COVID restrictions early in the year. The country’s development was declining in April according to poor economic data.

A default would probably cause a recession in the US and it might have devastating impacts on the world economy. This, in addition to a downturn in Germany, kept interest in risky stocks at a minimum. While Philippine equities dominated losses throughout Southeast Asia with a 0.8 percent decline, Australia’s ASX 200 index was unchanged.

Asia FX Market – In spite of the debt ceiling standoff, Asia FX recovers some of its weekly deficits.

The dollar held at two-month lower levels on Friday while markets waited additional details on the status of increasing the debt ceiling. While the majority of Asian currencies rose after suffering substantial declines this week.

The Japanese yen increased by 0.2%, yet it was one of the poorest performing Asian currencies for the week. Plunging by about 2% because the currency hurt from forecasts of a wider disparity between domestic and U.S. interest rates. Additionally, the yen-to-dollar exchange rate stood slightly above 6-month lowest points.

Softer-than-projected number was still much higher than the Bank of Japan’s 2% annual objective, The Tokyo inflation figures released on Friday increased speculation that the BOJ may delay tightening policy this year.

In a 0.3% increase, the Chinese yuan recovered from a nearly 6-month bottom. Although the yuan received minimal help from the People’s Bank of China’s daily median fixes. It continued to trade far below the crucial 7- barrier to the dollar.

The Taiwan dollar increased by 0.4% while the South Korean won increased by 0.5%. As statistics released on Friday revealed that retail spending declined in April.  Despite increasing strain from rising prices and interest rates, the AUD increased by 0.1% but was still near to a -month 7 – trough.

In Asian trading, the U.S. dollar index and dollar index futures both experienced some profit-taking and dropped by approximately 0.2% apiece, but they rose by about 1% for the week. Additionally, the price of the two was at its highest point in two months.