TOKYO — Asian shares were mostly lower on Thursday, with Tokyo’s benchmark down more than 2%, as Wall Street’s record rally ran aground on concerns about potentially worsening trade tensions with China.
Japan’s Nikkei 225 index closed down 2.4% at 40,126.35.
The market was all about chip companies after a report from Bloomberg News said President Joe Biden is considering the toughest trade restrictions if companies like the Netherlands ASML and Japan’s Tokyo Electron continue to supply advanced semiconductor technology to China.
The US government has blocked chinese access advanced chips and the equipment to make them, citing security concerns and urging allies to do the same.
Tech-related stocks weighed on Tokyo trading. Shares of Tokyo Electron fell 8.9% and shares of chip equipment maker Advantest fell 4.8%. Lasertec Corp. fell 6.3%.
The stronger yen also raised concerns about Japan’s export stocks, as a weak yen benefits the country’s major exporters such as Toyota Motor Corp.
The U.S. dollar rose to 156.20 Japanese yen from 156.19 yen. The rate had traded above 161 yen for most of last week, but had fallen in recent sessions. The euro was at $1.0936, down slightly from $1.0941.
The recent currency fluctuations are a result of US politics taking “center stage,” according to Tan Jing Yi of Mizuho Bank. Former President Donald Trump has expressed concern that a strong dollar could be a disadvantage for the US, as it makes American products relatively more expensive in foreign markets.
Japan posted a trade surplus in June, its first in three months, signaling a recovery in exports, according to data from the Finance Ministry. In the first six months of this year, Japan’s trade deficit more than halved from the same period last year to 3.23 trillion yen ($21 billion).
Elsewhere in Asia, Hong Kong’s Hang Seng rose 0.5% to 17,827.50, while the Shanghai Composite index rose 0.3% to 2,972.94.
Investors await news on policies to revive the economy China’s slowing economy as a summit of the ruling Communist Party concludes in Beijing on Thursday.
Australia’s S&P/ASX 200 fell 0.3% to 8,036.50. South Korea’s Kospi fell 1.2% to 2,810.27.
Taiwan’s Taiex lost 1.6%, while chip giant TSMC fell 2.4% after the company suffered an 8% loss in U.S. trading.
Aside from concerns about further scrutiny of chip and equipment sales to China, Taiwanese shares fell after Trump criticized the self-governing island claimed by Beijing, which the US is under treaty to defend if attacked.
“Taiwan should be paying us for defense,” Trump said, according to a transcript of an interview published by Bloomberg. “Taiwan took our chip business away from us, I mean, how stupid are we?” he said.
Wednesday on Wall Street, losses for Nvidia and other Big Tech heavyweights dragged the Nasdaq Composite down 2.8%, its biggest drop since 2022. The index closed at 17,996.92.
The S&P500 fell 1.4% to 5,588.27.
Advanced Micro Devices fell 10.2% and Broadcom fell 7.9%.
The Dow Jones Industrial Average rose 0.6% to 41,198.08.
That was a continuation of a recent trend that market watchers called encouraging, one in which more stocks are rising rather than just a handful of dominant elites. The smaller stocks in the Russell 2000 were coming off a big five-day winning streak on hopes that Interest rates will be lower soon and the American economy will avoid a recession, although the index fell 1.1% on Wednesday, giving back some of its gains.
ASML saw its US-traded shares fall 12.7% despite spring sales coming in at the high end of forecasts.
The moves of big tech stocks have an outsized effect on indexes like the S&P 500, which gives more weight to larger companies. That’s been a boon in recent years, when a small group of companies known as “the Magnificent Seven” have soared almost regardless of what the overall economy and interest rates were doing. That’s helped mask underlying weaknesses as the economy grappled with high interest rates meant to eradicate inflation.
In energy trading, U.S. benchmark crude rose 82 cents to $83.67 a barrel. Brent crude, the international standard, rose 61 cents to $85.69 a barrel.