Japan, Hong Kong stocks lead Asia markets lower; investors assess inflation data

Japan, Hong Kong stocks lead Asia markets lower; investors assess inflation data

Samsung Electronics shares fall after report that its HBM chips have yet to pass Nvidia tests

A Samsung Electronics Co. 12-layer HBM3E, top, and other DDR modules arranged in Seoul, South Korea, on Thursday, April 4, 2024. Samsung’s profit rebounded sharply in the first quarter of 2024, reflecting a turnaround in the company’s pivotal semiconductor division and robust sales of Galaxy S24 smartphones. Photographer: SeongJoon Cho/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

Samsung Electronics shares fell 2.3% after Reuters reported that the South Korean tech giant’s latest high bandwidth memory (HBM) chips are not yet ready for use by U.S. chipmaker Nvidia.

Three people briefed on the problems told Reuters there were heat and power consumption issues with Samsung’s chips.

The problems were related to the company’s fourth-generation HBM3 chips (which are most widely used for graphics processing units for AI), and the next generation HBM3E chips that Samsung and its rivals are releasing to the market this year, according to the report.

Samsung shares weighed down the broader Kospi, which fell 1.05%.

Nvidia reported late on Wednesday that its fiscal first quarter revenue more than tripled and its data center business grew 427% from a year earlier.

— Shreyashi Sanyal

Japan inflation slows, consumer prices in April rose 2.5%

Japan’s inflation eased slightly to 2.5% in April, lower than the 2.7% seen in March and marking a second straight month of slowing inflation.

Core inflation, which excludes prices of fresh food, also slowed to 2.2% from 2.6%, in line with expectations.

The so-called “core-core” inflation rate — which strips out both fresh food and energy prices and is considered by the Bank of Japan when formulating monetary policy — saw the sharpest fall to 2.4% in April from 2.9% the month before.

— Lim Hui Jie

CNBC Pro: CIO shares Nvidia alternatives to cash in on the AI theme: ‘There’s another way to play this’

Nvidia delivered once again, with its results proving it’s showing no signs of slowing down.

The chipmaker’s shares jumped in extended trading but given the “blowout earnings,” Nancy Tengler of Laffer Tengler Investments said she expected to see a higher move.

“I think a lot of that has been priced in and now you’ll see it trickle out as it has been into other players in in this space,” the chief investment officer told CNBC’s “Squawk Box Asia” on Thursday.

“We think there’s another way to play this,” she said.

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— Weizhen Tan

Market pricing now points to just one rate cut this year

Traders are lowering their expectations — again — for how many times the Federal Reserve will lower interest rates this year, and moving the outlook for the first cut still later.

A day after minutes from the last Fed meeting affirmed that policymakers are worried over inflation and not in a hurry to cut, traders in the fed funds futures market reduced their outlook to just one reduction in 2024. The probability of just a single cut jumped to nearly 58%, according to the CME Group’s FedWatch Tool. Earlier this week the market was looking for two reductions.

At the same time, the first move lower is not expected to happen until at least September and more likely November. At the beginning of the year, traders were pricing in at least six cuts starting in March. The probability for a September cut fell to 51% Thursday afternoon.

—Jeff Cox

Geopolitical concerns will weigh more on markets

As the first-quarter earnings season winds down, investors will shift more of their attention to geopolitical concerns in the next few months before the next round of earnings, according to SimCorp.

“The Fed has been pretty clear that they’re not going to cut rates, so you don’t have this, ‘Will they or won’t they’ [scenario] keeping everybody on edge. We are going to start to see a turn to some of this geopolitical stuff, whether it’s its elections or the two ongoing wars,” said Melissa Brown, managing director of applied research.

While events such as the U.S. and UK elections don’t necessarily result in economic impacts, they do increase uncertainty, Brown noted.

“People may go from saying ‘I’m just going to buy now,’ to, ‘Look, I’m gonna wait and see the outcome of this before I decide to commit more money to market,'” Brown said.

— Hakyung Kim

AI, semiconductor stocks jump after strong Nvidia outlook