Japan’s Yen Falls to a 38-Year Low, APAC Markets Falter

Japan’s currency yen fell to a 38-year low this week, reaching 160.33 yen per dollar.  

The latest decline in the yen’s value led to the Asian-Pacific (APAC) markets faltering. All the market indices, including Nikkei 225 (Japan), Hang Seng (Japan), ASX 200 (Australia), Shanghai (China), KOSPI (South Korea) and CNBC 100 Asia, reflected a decline in their performances. As the charts confirms, Hong Kong’s index showed the worst performance in Asia, dropping by more than 2%.  

Shunichi Suzuki, Japan's finance minister, said the government is concerned about the impact of the falling yen on the economy and is closely observing the currency market. The latest decline could force the Japanese central bank to raise interest rates from near zero. Below is a look at the performance of a few APAC markets recently:  

• China's industrial profit grew 3.4% year-on-year from January to May, hitting $378.41 million.  

• China's industrial profit for the first four months of 2024 had risen 4.3%.  

• In Australia, inflation hit a six-month high at 4% in May 2024; the inflation in the country (May 2024) is among the highest in the developed countries.  

The United States, the United Kingdom, and multiple European countries are well on the verge of ending the high inflation and starting to cut rates.  

Nvidia Rebounds, Asian Chipmakers Follow Suit  

Nvidia’s shares reflected a rebound recently after dipping in the charts earlier this week. However, its stock rebounded on Tuesday after it had been under pressure in the previous three trading sessions, leading to the stock price declining by more than 10%.  

The stock recovered by 6.8%, becoming the second best-performing stock in the S&P 500 index. This rebound came after Nvidia’s shares fell by 12, with the stock price declining by 9% in the previous three days. This rally was massive because it was the first time since March 9, 2021, that Nvidia’s stock had gained 6% or more after falling by 6% in a prior session.

Morgan Stanley has come out with a new report supporting its Nvidia stance after a recent trip to Taiwan.

“Demand-side indications remain robust, with surprising demand still for H100, growing visibility for limited H200 ramp, Blackwell demand booked out through mid-next year, and a strong ramp of the H20 for the China market.”  

After Nvidia’s rebound, most Asian chipmakers were quick to follow suit. Advantest Corp./ATEYY (Japan), Taiwan Semiconductor Manufacturing Company Ltd./TSM (Taiwan), SK Hynix Inc./000660.KS (South Korea) and MediaTek Inc./2454.TW (Taiwan) rose 7%, 1.59%, 5.33% and 1.44%, respectively. South Korean multinational chipmaker Samsung Electronics/005930.KS rose a modest 0.62%.  

The recent volatility in the Japanese yen and Nvidia’s recent price movement have impacted the Asia-Pacific region. The uncertainty in Japan’s yen calls for immediate attention, while Nvidia's rebound gives a positive sign for Asian chipmakers. Regarding the yen, traders hope the Japanese government will step up and rein in the yen’s downward trajectory.