Global Stocks Muted After U.S. Government Shutdown -- Update
January 22 2018 - 12:02AM
Dow Jones News
By Kenan Machado
Market reaction remained muted Monday in Asia after the partial
shutdown of the U.S. federal government, with little movement in
stocks and other asset classes.
But Samsung Electronics fell as fresh caution grew about demand
for rival Apple's most expensive iPhone. While the South Korean
company has its own line of smartphones, it is also a global
manufacturer of components.
Samsung's next-generation displays feature organic
light-emitting diodes, or OLED. Apple uses Samsung's technology for
the iPhone X. But SK Kim, which tracks Samsung for Daiwa
Securities, said there are some concerns Apple could stop using
OLED screens due to quality issues.
That comes as iPhone X sales continue to be a worry. After
channel checks with Apple vendors by Daiwa's Taiwan-based analyst
Kylie Huang, Daiwa now expects first-quarter orders to be 20% to
30% below the broker's previous forecasts.
This "dovetails with our concern that the iPhone X's high price
point could impact ongoing sell-through," Ms. Huang said. However,
Mr. Kim said the stock-market reaction on Samsung "is
overdone."
Samsung was recently down 2.6%. South Korea's Kospi was dragged
down by electronics giant, falling 1.1%.
But the worries weren't widespread, with smartphone-lens
companies Largan Precision and Sunny Optical as well as Apple
product-assembler Hon Hai little changed.
Stocks in Taiwan, home to a number of companies in Apple's
supply chain, continued to rise with the Taiex hitting another
28-year high. It was recently up another 0.3%, helped by a 1.6%
jump in Taiwan Semiconductor, that market's biggest company. That
stock rallied 7.8% last week amid strong fourth-quarter
results.
Still, Apple audio supplier AAC Technologies fell 2% in Hong
Kong. Japan's Alps Electric--which makes sensors--dropped
similarly.
Meanwhile, stocks in other Asian markets were little swayed by
the U.S. budget impasse, with the situation largely seen as
"political brinkmanship with little economic impact," said Michael
McCarthy, chief market strategist at CMC Markets.
The Wall Street Journal Dollar Index was recently down less than
0.1% while 10-year Treasury yields remained at 2.66% and S&P
500 futures were off 0.1%.
One market moving was New Zealand, where the NZX 50 closed up
0.5%. Equities there have notably underperformed this month, with
the index entering today's trading down 1.3% amid broad gains
elsewhere.
The benchmark, which rose every month last year, has been hit in
January, partially by concerns about the country's currency value
rebounding too much after 2017 declines. The New Zealand dollar
recently hit multi-month highs against the U.S. dollar, leading to
selling in some export-reliant companies.
But the currency gains have stalled in recent days, fueling
gains for a2 Milk, which rose another 3.5% Monday.
Elsewhere, smaller-cap Chinese stocks were rebounding sharply
after fresh weakness early Monday. The startup-heavy ChiNext, which
hit a six-month low soon after the open, finished morning trading
up 2.5%.
Financials, which have been hot this month, pulled back as
Pudong Development Bank was fined 462 million yuan ($72 million)
for allegedly falsifying loan applications and covering up bad-debt
levels.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
January 21, 2018 23:47 ET (04:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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