Asian shares fall as chip sell-off outweighs TSMC’s record profit

Asian stock markets declined on Thursday as heavy losses in semiconductor shares overshadowed stronger-than-expected earnings from Taiwan Semiconductor Manufacturing Co, while softer US inflation data supported bonds.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, with South Korea’s KOSPI dropping 6.2%. Samsung Electronics lost 6.6%, while SK Hynix fell 9%.

Japan’s Nikkei declined 3%, although Hong Kong’s Hang Seng Index moved against the regional trend and gained 1.8%.

TSMC, the world’s largest contract manufacturer of advanced artificial intelligence chips, reported a 77% increase in second-quarter profit to a record level that exceeded market expectations. Its shares closed 1.2% higher ahead of the results, but the gain was insufficient to offset the wider decline in chip stocks.

Brian Heavey, an equity trader at JPMorgan, said the sell-off appeared to reflect high investor expectations for semiconductor earnings rather than any single negative development.

ASML, a major supplier of chipmaking equipment, closed 0.4% lower despite raising its 2026 sales forecast and announcing plans to expand capacity.

Wall Street ended higher overnight as investors shifted from semiconductor companies into large technology stocks and banks following strong earnings from major lenders. Asian markets were more exposed to the chip decline because of the region’s heavier weighting towards semiconductor companies.

European stock futures indicated a slightly higher opening, with pan-European futures up 0.2%, while US equity futures were mostly unchanged.

Bond markets drew support from weaker-than-expected US producer price data for June, which followed softer consumer inflation figures a day earlier.

Markets reduced the probability of a Federal Reserve interest rate increase in July to 10% from 43% earlier in the month.

Two-year US Treasury yields rose 2 basis points to 4.1514% after falling 14 basis points over the previous two sessions. Ten-year yields edged up 1 basis point to 4.5594% after declining 7 basis points over the same period.

The dollar index was steady at 100.52 after falling 0.4% overnight to its lowest level since June 18.

The Japanese yen traded around 162.15 per dollar, close to its 40-year low of 162.84, as investors remained alert to possible intervention by Japanese authorities.

Oil prices turned lower after the United States completed its latest strikes on Iran. Brent crude fell 0.5% to $84.50 per barrel but remained 11% higher for the week.

The conflict has intensified in recent days, with Washington striking Iran and Tehran targeting US bases in Kuwait and Jordan.

Sterling held at $1.3532 after touching a two-month high on expectations that Andy Burnham, who is likely to become the new Labour Party leader, would appoint a fiscally conservative finance minister.

Gold fell 0.8% to $4,027 per ounce.