Investing.com– Most Asian stocks fell on Wednesday, with losses concentrated around Taiwan and China after U.S. Republican presidential candidate Donald Trump said that Taiwan should pay the U.S. for defense.
Still, broader losses were limited by a strong lead-in from Wall Street, where the surged nearly 2% to record highs as optimism over lower interest rates saw traders pivot into more economically sensitive sectors and out of technology.
U.S. stock index futures fell slightly in Asian trade.
Taiwan, China stocks sink after Trump comments
Taiwan’s index fell 0.3%, while China’s and indexes fell 0.1% and 0.5%, respectively. Hong Kong’s lost 0.2%.
In an interview with Bloomberg Businessweek, Trump said that he believed Taiwan should pay the U.S. for supplying the island with defense equipment, on the grounds that Taiwan does not give the U.S. anything.
“I know the people very well, respect them greatly. They did take about 100% of our chip business. I think, Taiwan should pay us for defense,” Trump said in the interview, adding that the U.S. was no different than an insurance company.
Relations between Taiwan and China are a sensitive topic, given that Beijing has constantly called for the reunification of Taiwan and the mainland. The U.S. is the island’s biggest defense supplier, but has no formal diplomatic agreement with Taipei.
Concerns over a Trump presidency had also rattled Chinese markets in recent sessions, given that the former president has maintained a strong rhetoric against the country. His administration had sparked a trade war with Beijing in the late-2010s.
Chinese markets were also nursing losses from a swathe of weak economic readings from the country.
Tech stocks dip with key earnings on tap
Asian tech stocks, particularly chipmakers, retreated on Wednesday, as expectations of interest rate cuts drove flows into more economically sensitive sectors.
Major chipmaking stocks were also on edge before key earnings from the sector this week, namely ASML Holding NV (AS:) ADR (NASDAQ:) and TSMC (TW:) (NYSE:), who will report earnings on Wednesday and Thursday, respectively.
Both are considered as bellwethers for chip demand, which rose sharply over the past year amid increased interest in artificial intelligence.
TSMC fell about 2% following Trump’s comments on Taiwan.
Losses in chipmakers saw Japan’s rise only 0.2%, while South Korea’s lost 0.2%.
Other Asian indexes- specifically those with lower weightage in tech- advanced on the prospect of interest rate cuts. Japan’s index added 0.5%, while Australia’s surged 1% to a record high.
Futures for India’s index pointed to a positive open, as the index and the continued to notch record highs on persistent optimism over India’s economy.
