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Morning Bidding: Markets Brace for Supply Chain Aftershocks
The earthquake in Taiwan, the strongest in at least 25 years, has also put pressure on the global supply chain. The island accounts for about 90% of chipmaker TSMC's production, and while most of its factories are located across the river from the epicenter, they are filled with fragile equipment that is critical to producing chips for global companies. TSMC said it had evacuated some of its manufacturing plants and that its security systems were functioning normally, while it confirmed the details of the impact.
Tom Westbrook's outlook for the day ahead in European and global markets
The strongest earthquake to hit Taiwan in at least 25 years has also put pressure on global supply chains.
The island of Taiwan accounts for about 90% of chipmaker TSMC's production, and although most of its factories are located across the river from the epicenter, they all have much of the fragile equipment that is critical to producing chips for global corporations.
TSMC said it had evacuated some of its manufacturing plants and that its security systems were operating normally, while it confirmed details of the impact. The quake has killed four people, knocked down buildings in the eastern county of Hualien and was also felt in Shanghai, with aftershocks continuing through the morning in Taipei.
The severe damage to the chip foundries will have global repercussions, underscoring the urgency of U.S. Armed Forces President Joe Biden's strategy of encouraging onshore production to reduce reliance on Taiwan's output.
Shares of TSMC, which accounts for more than 60% of the world's firmware chip manufacturing and monopolizes the production of advanced microprocessors, were down 1.4% in morning trading.
Shares of Apple supplier Foxconn fell more than 21 TP3T, while flat-panel maker Optronics was down 1.71 TP3T. Markets were also broadly down as investors awaited a speech by Federal Reserve Board Chairman Jerome Powell and U.S. services and jobs data due out later in the day.
Stronger-than-expected U.S. manufacturing data on Easter Monday appeared to trigger a sell-off in the bond market, pushing the benchmark 10-year yield through major chart resistance and triggering more selling.
The 10-year bond yield stabilized at 4.35% in the Asian trading session on Wednesday, with the foreign exchange market showing an uneasy calm as traders are hesitant to test the bottom line of Japan, where the Japanese government has increased its warning of possible intervention.
The yen-dollar exchange rate stabilized at 151.55.[FRX/]
European inflation data will also be released later and is expected to cool slightly.
Key dynamics likely to affect Wednesday's market:
Economy: Eurozone inflation, US non-manufacturing ISM, ADP employment figures
Speech: Federal Reserve Powell
(Reporting by Tom Westbrook; Editing by Jacqueline Wong)
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