Japan dwarfs Asian stocks on tech strength, Chinese markets lag

Investing.com — Japanese stocks fell back to a 33-year high on Friday, outperforming their Asian peers amid heightened optimism about chipmaking stocks, while Chinese markets lagged on concern from investors. investors by slowing economic growth and worsening relations with the United States.

Broader Asian stocks also edged lower in anticipation of more signs of the US debt ceiling and possible 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 that are exposed to the company. Nvidia said that increased interest in artificial intelligence will boost demand for chips this year.

The broader added 0.2%, also falling back towards 33-year peaks.

Semiconductor Test Equipment Manufacturer Advantest Corporation (TYO:) jumped 5.1% to an all-time high as chipmakers Tokyo Electron Ltd. (TYO:) and Dainippon Screen Mfg. co., ltd. (TYO:) rose 6% and 9%, respectively.

Japanese stocks also benefited from weaker-than-expected value, which could herald further weakness in domestic inflation and keep the Bank of Japan dovish.

The optimism about Nvidia spilled over to other chip-heavy indices. The index rose 1.2%, led by earnings from TSMC (TW:), while South Korea’s rose 0.2% on the strength of Samsung Electronics Co Ltd (KS:) and SK Hynix Inc (KANSAS:).

But, on the other hand, the Chinese and Chinese indices fell by 0.4% and 0.1%, respectively. The two were set to lose nearly 3% this week as concerns about worsening ties between Washington and Beijing affected sentiment towards Chinese markets.

China’s ban on local sales by US chipmaker Micron Technology Inc (NASDAQ:) this week raised fears of a new trade war between the two countries, though US officials said the move had not “torpedoed” the relationships.

Rising COVID-19 cases and slowing economic growth have also kept investors wary of China, with a new outbreak set to peak in late June. Weak economic indicators in April showed that growth in the country was slowing despite the lifting of anti-COVID measures earlier this year.

Broader Asian markets were muted as attention remained on negotiations to raise the US debt ceiling and avoid a default. Negotiations were underway ahead of the June 1 deadline for the US default, though lawmakers offered little indication that a deal was imminent.

A default is likely to result in a US recession and could have dire consequences for the global economy. This, coupled with a , kept appetite for higher-risk stocks limited.

Australia’s index was flat, while it led losses in Southeast Asia with a 0.8% drop.