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Asian shares slipped on Friday as a warning on smartphone demand from the world’s largest contract chipmaker slugged the tech sector, while high oil prices stirred inflation fears and undermined sovereign bonds.
Apple led the way after Taiwan Semiconductor Manufacturing cut its revenue target to the low end of forecasts and blamed softer demand for smartphones.
“The big story for the APAC region today will be fallout from TSMC’s miss, which will weigh heavily on the tech sector, with first order impacts on the Semis and Samsung Electronics/ Galaxy supply chain,” analysts at JPMorgan said in a note.
“The miss appears largely to have been due to Apple iPhones, and so may also weigh on the Apple supply chain.”
Taiwan's main index .TWII slid 1.4 per cent with techs sinking 3.5 per cent and TSMC off more than 5.0 per cent.
Stocks in South Korea .KS11 took a 0.3 per cent dip, with the tech sector losing 1.6 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.8 per cent, again led by a 0.7 per cent fall in technology.
Japan's Nikkei .N225 recouped early losses to rise 0.1 per cent as gains in energy and financials outweighed the drop in tech.
Wall Street had also been hit by weak results from tobacco company Philip Morris, which sent its shares down as much as 17.7 per cent and dragged on the S&P 500.
The Dow .DJI ended down 0.34 per cent, while the S&P 500 .SPX lost 0.57 per cent and the Nasdaq .IXIC 0.78 per cent.
Inflation fuel
Oil prices were creeping up again after hitting their highest since late 2014 on drawdowns in global supply and as Saudi Arabia looks to fatten its export revenue.
Brent crude futures LCOc1 edged up 6 cents to $73.83 a barrel, while U.S. crude CLc1 added 7 cents to $68.36.
A global oil glut has been virtually eliminated, according to a joint OPEC and non-OPEC technical panel, two sources familiar with the matter said, thanks in part to an OPEC-led supply cut deal in place since January 2017.
Analysts at CBA noted market measures of inflation expectations had spiked higher this week as oil prices surged, with some hitting highs not seen since mid-2014.
That in turn pressured fixed-income debt with yields on 10-year Treasuries US10YT=RR jumping to a one-month top at 2.93 per cent. Yields are up 10 basis points in just two days, the sharpest move since early February.
In currency markets, the main mover was sterling which dived late on Thursday when Bank of England Governor Mark Carney cooled expectations for an interest rate hike in May, pointing out there were “other meetings” this year.
Sterling dropped more than a cent to $1.4078 GBP=D4, leaving the week's peak of $1.4373 a distant memory.
The sudden retreat in sterling helped support the US dollar more broadly and the dollar index .DXY was steady at 89.956.
The euro also eased back a touch to $1.2341 EUR=, while the dollar inched up on the yen to 107.62 JPY= and looked set to test the recent top at 107.78.
On the radar later in the day will be IMF and World Bank meetings in Washington where free trade and protectionism is certain to be high on the agenda along with Sino-US tensions.