Asia Markets

Asia Pacific markets mostly higher as semiconductor stocks jump

Key Points
  • Most major Asia Pacific stock markets gained on Thursday.
  • The Reserve Bank of Australia Governor Philip Lowe said Thursday "it is reasonable to expect an extended period of low interest rates." The Australian central bank has slashed interest rates to a record low, after two consecutive cuts.

Most major Asia Pacific stock markets closed higher on Thursday as semiconductor stocks in Japan and South Korea rose.

Mainland Chinese stocks saw gains on the day. The Shanghai composite added 0.48% to about 2,937.36 and the Shenzhen component edged up 0.85% to 9,344.82. The Shenzhen composite gained 0.629% to approximately 1,572.80.

Hong Kong's Hang Seng index gained 0.25% to end its trading day at 28,594.30, with shares of Chinese tech giant Tencent jumping 1.86%.

Meanwhile, the Nikkei 225 in Japan rose 0.22% to close at 21,756.55, with shares of index heavyweight Softbank Group advancing 1.8%. The Topix index gained 0.18% to finish its trading day at 1,577.85.

Australia's S&P/ASX 200 closed 0.61% higher at 6,818.00, with most sectors advancing.

In an earlier speech, Reserve Bank of Australia Governor Philip Lowe said "it is reasonable to expect an extended period of low interest rates." The Australian central bank has slashed interest rates for two months in a row, bringing it to a record low.

In South Korea, however, the Kospi slipped 0.38% to close at 2,074.48 as shares of LG Chem plunged 4.95%.

Overall, the MSCI Asia ex-Japan index rose 0.26%.

Semiconductors jump

Shares of South Korean chipmaker SK Hynix jumped 2.06% on Thursday after the company announced a reduction in chip output.

Tumbling memory chip prices led to a 89% year-on-year plunge in SK Hynix's operating profit for the reporting period, which came in at approximately 638 billion Korean won ($541.9 million), missing analysts' expectations.

Shares of rival Samsung Electronics, an industry heavyweight, also gained 1.72%.

The company also said Thursday its Galaxy Fold phone is set to launch in September, following an earlier delay after multiple tech reviewers reported that the device broke easily. Samsung is set to formally announce earnings on July 31.

Meanwhile, shares of Japanese semiconductor test equipment manufacturer Advantest soared 20.23%.

It comes as Japan introduced export restrictions on high-tech materials to South Korea that are critical in the production of semiconductors. Analysts have warned that if it remains unresolved, there could be serious consequences to the global semiconductor industry.

Companies are usually assumed to be holding around two months of inventory, SK Kim, executive director and analyst at Daiwa Securities, told CNBC's "Street Signs" on Thursday. If the trade conflict between Tokyo and Seoul extends beyond two months, the South Korean chipmakers could see a "disruption" in their supply, he added.

"It will be negative for the global IT industry," Kim said. "Korea semiconductor makers ... account for about 70% of global memory market share."

Overnight on Wall Street, the S&P 500 advanced 0.5% to close at a record of 3,019.56, while the Nasdaq Composite rose nearly 0.9% to end the day at 8,321.50. The Dow Jones Industrial Average, however, closed 79.22 points lower at 27,269.97.

ECB meeting awaited

Elsewhere, the European Central Bank is also set to meet on Thursday. Analysts expect that it would keep interest rates unchanged.

"The risk is the ECB loosens monetary policy tonight which can further undermine (the euro)," Joseph Capurso, senior currency strategist at Commonwealth Bank of Australia, wrote in a note.

"Our base case is for the ECB to remove its forward guidance tonight that interest rates will remain 'at their present level through the first half of 2020, and in any case for as long as necessary'," Capurso said.

Ahead of that meeting, the euro traded at $1.1128 after slipping from levels above $1.12 seen earlier in the trading week.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.747 after touching lows around 97.6 yesterday.

The Japanese yen traded at 108.08 against the dollar after seeing highs around 108.0 in the previous session, while the Australian dollar changed hands at $0.6967, slipping from levels above $0.699 yesterday.

Oil prices were higher Thursday afternoon during Asian trading hours, with the international benchmark Brent crude futures contract rising 0.52% to $63.51 per barrel. U.S. crude futures advanced 0.59% to $56.21 per barrel.

— Reuters and CNBC's Fred Imbert contributed to this report.