Asian Equities Drop Amid U.S.-China Trade Tensions; Yen Surges

Asian equities fell, primarily driven by declines in chip stocks due to escalating U.S.-China trade tensions. The yen surged to a six-week high following suspected interventions by Tokyo. The U.S. dollar remained weak, and investor focus shifted to Federal Reserve and European Central Bank policies.

Asian equities witnessed a significant decline on Thursday, with chip stocks leading the downturn amid heightened trade tensions between the United States and China. The yen surged to a six-week high, driven by suspected interventions from Tokyo last week.

The U.S. dollar hovered near its weakest in four months against a basket of currencies, as comments from Federal Reserve officials bolstered the case for a rate cut in September. MSCI's broadest index of Asia-Pacific shares outside Japan declined by 0.57%, with tech-heavy South Korean shares dropping nearly 1%. The strengthening yen and a sharp fall in chip stocks pushed Japan's Nikkei down by 2%.

China's stock market also slid as investors awaited policy announcements from a key leadership meeting in Beijing. The Shanghai Composite index dipped 0.4%, and the blue-chip CSI300 index fell by 0.5%. Reports of the U.S. considering tighter restrictions on semiconductor exports to China weighed heavily on Nvidia and Apple, causing the Nasdaq to tumble. The situation worsened after Republican presidential candidate Donald Trump's comments on Taiwan's chip business, leading to a 3% slump in Taiwan Semiconductor Manufacturing Co's shares.

(With inputs from agencies.)