Emerging Markets-S.Korea, Taiwan shares reverse course to gain ahead of Nvidia earnings

On Monday, the Trump administration warned countries to cut their business ties with Iran or face secondary sanctions as part of what it billed as an "economic D-Day," while Iran vowed to retaliate. Oil prices fell after the warning and were flat Tuesday, while the dollar rebounded from three-month lows. U.S. yields dropped on a report that the Treasury could tap its cash account to fund increased bond buybacks. Currencies were tepid on the day. The Thai baht `THB=TH` slightly weakened to 32.74 per dollar, while the Philippine peso `PHP=` remained flat. "Markets reversing intra-day ahead of a binary event is textbook positioning behavior," said Inki Cho, a senior financial market strategist at online trading platform Exness. "Investors are buying back at lower levels after this morning's dip, not because the outlook changed but because the risk/reward improved." Chipmaker SK Hynix closed up 0.4%, and Taiwan Semiconductor Manufacturing Co `2330.TW` ended 1.1% higher. Separately, SK Hynix's union members narrowly rejected a tentative wage agreement, according to a source familiar with the matter. Elsewhere, Philippine stocks `.PSI` fell over 1% while Thai stocks `.SETI` lost 0.2%. Indonesian and Malaysian markets were closed for a holiday. The action-packed week includes central bank meetings in Asia and U.S. Federal Reserve Chair Kevin Warsh's speech at the annual Jackson Hole conference on Friday for greater clarity on the Fed's outlook after a dearth of recent commentary. Any hawkish indications could challenge tech giants, many of which have tapped debt and equity markets to fund capex, fueling blockbuster IPOs and competing with the U.S. Treasury for capital. "Jackson Hole follows immediately with Warsh's keynote Friday, and a hawkish signal there can reverse any chip-driven move within 24 hours," Cho added. Thailand's central bank is expected to leave rates steady on Wednesday, while those in South Korea and the Philippines were expected to raise rates by 25 basis points each. The South Korean won `KRW=KFTC` slightly fell from its near one-year high of 1,378.9 per dollar. South Korean and Taiwan stocks recovered on Tuesday, shrugging off a U.S. chip selloff as investors awaited Nvidia's earnings for clues on the AI trade's direction. South Korea's KOSPI `.KS11` ended 0.7% higher, after sliding over 4% earlier in the day, and Taiwan equities `.TWII` caught up to close 0.9% higher, after declining over 1%. Risk seekers bought the dip in Asian chip stocks ahead of Nvidia's `NVDA.O` earnings, betting on the AI trade despite options markets implying a roughly $280 billion swing in the company's market value.

Emerging Markets-S.Korea, Taiwan shares reverse course to gain ahead of Nvidia earnings

Oil, dollar and currency moves

Chip stocks and regional markets move unevenly

Central bank meetings and macro backdrop later this week

South Korea and Taiwan stocks recover ahead of Nvidia results

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Wall Street Journal - Aug 25