Morning Highlights: TSMC passes $1 trillion, China boosts magnet exports by 2.5 times

Taiwan Semiconductor, the world's largest contract supplier of chips, reached a capitalization of $1 trillion thanks to growing demand for processors for artificial intelligence and revised forecasts. China ramped up rare earth shipments in June, but volumes are still far from pre-crisis levels. Trump's aides discussed terminating some SpaceX contracts, but recognized most of them as critical to the state. On these and other topics - in our review of key events for the morning of July 21.

Taiwan Semiconductor Manufacturing's (TSMC) market capitalization hit $1 trillion for the first time last week, helped by an upward revision to its forecast and optimism about robust demand for artificial intelligence technology, reports Bloomberg.

The main supplier of chips for Apple and Nvidia on Friday showed a record rise in shares - almost 50% from the April low. The market value of the company is now comparable to the capitalization of Berkshire Hathaway, and further growth could put TSMC in the top ten largest companies in the world.

The price hike reflects growing investor confidence that the world's top contract chip maker can build on its dominance amid the AI boom. Last week, the company raised its full-year revenue growth forecast to about 30%, pointing to potential gains from the fierce race for AI manufacturing capacity.

"TSMC expects demand for advanced process technology to strengthen as AI customers show no signs of decreasing appetite," Goldman Sachs analysts wrote following the company's quarterly report. - We expect more significant price increases [for its products] in 2026."

Oil prices rose slightly on Monday as traders assess the impact of new European sanctions on Russian crude supplies. At the same time, they fear the duties could dampen demand for fuel, while Middle Eastern producers are increasing production, reports Reuters.

Brent crude futures rose by 6 cents to $69.34 per barrel by 03:44 GMT after falling 0.4% on Friday. The price of U.S. West Texas Intermediate crude rose 17 cents to $67.51 per barrel after falling 0.3% in the previous session.

The European Union on Friday approved an 18-pack of sanctions against Russia over the conflict in Ukraine. Among other things, the measures affected the Indian company Nayara Energy, which exports oil products made from Russian oil. 

ING analysts believe that the weak market reaction indicates a lack of confidence in the effectiveness of these sanctions. "The most significant may be the clause under which the EU imposes a ban on imports of oil products produced from Russian oil in third countries," they said. - At the same time, it will be difficult to trace the origin of oil, and thus to ensure the implementation of the ban".

China boosted exports of rare-earth magnets - including to the U.S. - in June after a global deficit that threatened to halt production and escalate trade conflicts, reports Bloomberg.

Shipments of magnets totaled 3,188 tons, according to data released Sunday, more than double the figure for May, when severe export restrictions were in place. Shipments to the U.S. rose to 353 tons - up from just 46 tons a month earlier. However, total exports are still well below the level recorded before Beijing imposed export controls in early April.

China has imposed export restrictions on seven of 17 rare earth elements, including powerful magnets used in high-tech manufacturing, from electric cars and smartphones to fighter jets. That posed serious risks to U.S. industry and prompted Donald Trump to pursue a trade truce, the agency said. After agreeing to reduce tensions in Geneva in June, Trump said China had agreed to fully resume shipments. 

Global hedge funds actively dumped Japanese stocks last week, at the fastest pace in nearly two and a half months, Goldman Sachs said in a note cited by Reuters. That came ahead of the country's upper house elections on Sunday, which saw Japan's ruling coalition lose its majority in the upper house. 

The outcome of the vote was a major blow to Prime Minister Shigeru Ishiba, which coincided with investors' expectations, the agency points out. According to Goldman Sachs, hedge fund sales between July 11 and July 17 were mainly driven by an increase in short positions and a relatively moderate reduction in long positions.

Japanese markets are closed on Monday because of a holiday, but gains in the yen and Nikkei index futures showed investors had already factored the election outcome into prices, agreedReuters. The Japanese currency has weakened significantly this year amid expectations of tax policy changes and a widening budget deficit.

Just days after President Trump raised the issue of severing ties with Ilon Musk's companies during a public spat with the billionaire in early June, the White House began a review of SpaceX's government contracts, sources told The Wall Street Journal. An administration official asked the Defense Department, NASA and other agencies to fill out spreadsheets that included the cost of the agreements and whether a competitor could perform the same task more efficiently, according to a letter seen by the newspaper.

However, following that review, the White House concluded that most of the contracts could not be canceled because they were critical. The company dominates not only rocket launches, but also as the largest provider of satellite internet.

Musk and SpaceX did not respond to WSJ requests for comment.

- Both of China's leading indexes rose after the country's regulator decided to keep key rates at historic lows. The mainland CSI 300 jumped 0.5%, while Hong Kong's Hang Seng was up 0.4%

- South Korea's Kospi index added 0.52%, while the Kosdaq small-company index was down 0.1%.

- Australia's S&P/ASX 200 index lost 1.13%, falling to a record low of 8658.1 points in morning trading. 

- Futures on U.S. indices traded in a slight minus by no more than 0.05%. 

This article was AI-translated and verified by a human editor