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TSMC strong results fail to lift stocks

Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker and Asia’s biggest technology company by market value, reported a strong rise in fourth-quarter profit and revenue on Thursday, but the figures did little to boost broader Asia-Pacific equity markets. US stocks extended their decline on Wednesday as losses among the “Magnificent 7” tech giants and weakness in major banks pulled the S&P 500 further from its recent peak, while European benchmarks also slipped from record levels. In commodities, gold and oil both retreated after US President Donald Trump signalled a softer stance on Iran and flagged closer engagement with Venezuela, moves that eased geopolitical risk premia and supply concerns.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker and Asia’s biggest technology company by market value, reported a 35% year-on-year increase in fourth-quarter net profit on Thursday, beating market expectations and setting a new record on the back of robust demand for artificial intelligence processors. Revenue in the quarter rose 20.5% from a year earlier to just over TWD 1 trillion, also ahead of forecasts, with the high-performance computing division - which includes AI and 5G applications for clients such as Nvidia and AMD - contributing the bulk of sales. The solid results weren't sufficient to support broader Asia-Pacific stocks on Thursday. Japan’s Nikkei 225 was trading 0.4% lower, falling from a fresh record high a day earlier. Korea’s Kospi outperformed with a gain of 1.6% after the country's central bank kept its benchmark interest rate unchanged at 2.50%, in line with market expectations. Australia’s S&P/ASX 200 was 0.5% higher, while Hong Kong’s Hang Seng Index was down 0.4% and mainland China’s CSI 300 was trading 0.1% higher.

Gold, oil retreat on Trump signals

Gold prices retreated in Asian trading on Thursday after three consecutive record sessions, down 0.3%, as US President Donald Trump’s softer stance on unrest in Iran and his comments that there was no immediate plan for large-scale executions reduced the perceived risk of US military escalation and trimmed bullion’s geopolitical risk premium. Silver also plummeted back below USD 90. Oil declined sharply, with Brent futures for March down 2.9% to USD 64.60 per barrel and WTI sliding 3% to USD 60.20, ending a five-day rally of more than 10%, after Trump’s remarks on Iran and his signalling of positive talks with Venezuela’s interim leadership on oil and trade raised expectations of higher Venezuelan crude exports over time. Meanwhile, US Energy Information Administration data shows an unexpected 3.4 million-barrel build in crude inventories and a 9 million-barrel rise in gasoline stocks underlined ample supply. Bitcoin was firmer on Thursday, extending its recent recovery with a 1.3% gain to around USD 96,200 and a two-month high as markets digested a proposed US crypto regulation bill and fresh buying by a major corporate holder.

US equities fall as tech slides

US stocks extended their decline on Wednesday, with the Dow Jones Industrial Average slipping 0.1%, while the Nasdaq 100 dropped 1.1% and the S&P 500 fell 0.5%, moving further away from its recent record high. Losses were driven by heavy declines among the "Magnificent 7" technology giants and by weakness in major US banks, where Citigroup and Wells Fargo slid 3.3% and 4.6% respectively after disappointing elements in their annual results, and Bank of America fell 3.8% despite better-than-expected figures. The benchmark KBW Bank Index fell 0.7%. In macroeconomic data, producer prices in the US rose more strongly than anticipated in November, gaining 0.2% in November after a 0.1% increase in October, pushing annual PPI inflation up to 3% from 2.8%. Meanwhile, retail sales also slightly exceeded forecasts, with core retail sales, increasing 0.4% in November after a downwardly revised 0.6% gain in October.

Euro-area stocks slip from records

European equities ended mixed on Wednesday, with the EuroStoxx 50 giving up an intraday record to close 0.4% lower at 6005.05 points as weaker opening levels on Wall Street dragged the index into negative territory. The move correction follows recent strong gains. Outside the euro area, UK stocks advanced and Switzerland’s SMI gained 0.8%, while sector performance in Europe was led by pharmaceutical, chemical and basic resources stocks, in contrast to notable declines in technology, media and travel and leisure shares; network carriers such as Air France-KLM and Lufthansa came under particular pressure after a downgrade by Barclays.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BlackRock, Goldman Sachs, Morgan Stanley, and Taiwan Semiconductor.

Economic data in focus: UK gross domestic product (08:00), French Consumer Price Index (08:45), Spanish Consumer Price Index (09:00), German gross domestic product (10:00), Italian industrial production (10:00), Philadelphia Fed Manufacturing Index (14:30), US weekly initial jobless claims (14:30), Empire State Manufacturing Survey (14:30) and US S&P Global Purchasing Managers’ Index (14:45).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.