The Asian markets are set to receive consumer confidence surveys from Japan, Australia, and Taiwan's latest inflation data. Despite the U.S. Treasury yields hitting new highs for 2024, risk appetite seems to be holding up in the region. This resilience is evident in the fact that benchmark Asian, emerging market, and world equity indices all saw modest gains on Monday, even as the global yields rose. Investors are seemingly adapting to the higher yields and the diminishing expectations of rate cuts from the Federal Reserve.
Taiwan is expected to report a cooling in annual inflation from 3.08% in February to 2.51% last month. Although this marks a notable slowdown, inflation remains comfortably above the central bank's 2% target. In February, Taiwan witnessed a significant rise of nearly 1.3 percentage points, the largest in three years. The central bank responded with a surprise interest rate hike last month. Additionally, Taiwanese chipmaker TSMC is in line to receive a substantial subsidy from the U.S. Commerce Department for advanced semiconductor production in Phoenix, Arizona. This news is likely to have a positive impact on TSMC's shares.
Alongside TSMC, Samsung is also set to receive a substantial investment from the U.S. government as it looks to expand its chipmaking operations. The Biden administration is reportedly planning to award $6-7 billion to Samsung for this purpose. However, Chinese stocks have been facing a different trajectory. Chinese markets have experienced a third consecutive daily decline, primarily due to concerns surrounding the troubled property sector. Developer Shimao Group's legal battle with China Construction Bank over unpaid debts has further added to the negative sentiment in the Chinese market.
In addition to the market turbulence, the Chinese currency remains under scrutiny. The onshore yuan has weakened to its lowest level in five months and is hovering near the upper limit of the central bank's daily trading band. On the other hand, the offshore yuan continues to trade above the band's ‘ceiling', indicating ongoing pressures on the currency.
The Asian markets are navigating through a challenging period characterized by rising global yields, inflation concerns, and geopolitical uncertainties. While certain sectors like semiconductor manufacturing are receiving government support, others, like the Chinese property market, are grappling with legal issues and investor apprehensions. The resilience displayed by the equity markets in the face of these challenges highlights the adaptability and robustness of the region's financial ecosystem.