Asian markets surged on [date], overcoming a plunge in Wall Street one day before. Stocks – Investors cheered the semiconductor industry’s big news, but volatility measures pointed to a change in mood.
The CBOE Volatility Index, widely known as the VIX, surged over 4 points, logging its best day in over three years. The index, which last traded above 34, is a measure of extreme market uncertainty. This recent spike in the VIX came on the heels of three straight sessions of losses, possibly indicating a reversal in investor sentiment.
In the automotive industry, stocks of Chinese electric car manufacturer Nio jumped by 3.95%. At the same time, NetEase added 3.9%, and Li Auto advanced 3.69%. These increases illustrate investor’s increasing confidence in the tech and auto industry in spite of rocky market conditions.
That VIX reading caught many by surprise, coming in at a much weaker than expected -0.5% decline according to a Reuters poll. This difference indicates that the market was expecting a different level of volatility than what we ultimately experienced.
Taiwan Semiconductor Manufacturing Company (TSMC) released first quarter profits that beat expectations. This stellar performance was due to a healthy and robust demand for the production of AI chips. This stellar performance added to the buoyant market sentiment across the region. Accordingly, semiconductor-related stocks in Japan and South Korea jumped.
Despite these gains, Taiwan’s benchmark Taiex index fell by 0.2% as of 11:25 a.m. local time, contrasting the overall positive trend in other Asian markets. In comparison, Hong Kong’s Hang Seng Index rose 1.61%, finishing at 21,395.14, showing strength in the face of widespread market turmoil.
In the currency markets, the Thai baht weakened by 0.12% against dollar, to 33.11. The Singapore dollar weakened by 0.22%, closing at 1.3135 per US dollar. These changes are part of a very real and continuing sea change as global investors take stock of the macroeconomic environment.
Thomas Poullaouec, head of multi-asset Solutions APAC at T. Rowe Price, emphasized the importance of looking beyond U.S. markets for investment opportunities.
“We see better opportunities outside of the U.S. (such as Europe, China and Asia-excluding Japan) on improving sentiment supported by increased fiscal spending as well as dovish central banks,” – Thomas Poullaouec
Outlined Poullaouec, despite supportive fundamentals, some sectors are quite vulnerable, owing to uncertainties stemming from trade.
“Fundamentals remain supportive, although spreads are vulnerable to impacts of trade uncertainty,” – Thomas Poullaouec
Beyond explaining spread sector performance, he highlighted where to invest, saying,
“spread sectors including global high yield and Asia credit bonds on attractive all-in yields.” – Thomas Poullaouec
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