Asian stocks fall on US tech jitters and yuan weakens
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In a sign some investors are looking to buy on dips, US stock futures gained. Japan is closed for a holiday.
PHOTO: EPA
- Asian stocks fell as US chipmaker losses deepened and investors waited for the US midterm elections. South Korea’s Kospi dropped almost 4%, led by Samsung Electronics and SK Hynix.
- China’s market support steps failed to lift shares, with the CSI 300 down 0.1%. The renminbi ended 13 straight gains after the People’s Bank of China asked banks to hold more foreign currency reserves.
- Oil steadied after an 8% fall, while Apple shares slipped on a mixed outlook. Analysts said markets are in a “risk-off mood” because of AI worries, politics, and geopolitics.
AI generated
Asian stocks fell as a sell-off in US chipmakers deepened and investors grew reluctant to trade ahead of the US midterm elections.
The MSCI Asia Pacific gauge dropped almost 1% with South Korea’s tech-heavy Kospi Index sliding almost 4%.
The decline came after a gauge of US chipmakers extended a three-day rout, bringing its losses to 12%. The Nasdaq 100 has declined 10% from its peak, entering a technical correction. Japanese markets were closed for a holiday.
Chinese equities fell even after the central bank said it would encourage financial institutions to make greater use of stock-support tools and optimise their terms as the authorities seek to bolster market stability.
The renminbi ended its longest winning streak in three decades after the People’s Bank of China moved to cool its rally by asking banks to hold more foreign currencies in reserve. The renminbi weakened as much as 0.4% to 6.6728 per dollar, halting 13 straight days of gains, which was the longest streak since 1996.
Kieran Calder, head of Asia equity research at Union Bancaire Privee, said: “Markets are mostly in a risk-off mood against the background of increasing AI concerns and the US midterm elections.
“We have looked at all US midterm elections since 1950 and found that the S&P 500 was higher six months later in each case. If this trend persists, we expect markets should move higher into year-end, but it could be a rocky week.”
South Korea’s Kospi Index led declines in Asia, with shares of its two chip giants, Samsung Electronics and SK Hynix, dropping more than 4%.
Hebe Chen, market analyst at Vantage Global Prime, said South Korea’s semiconductor-heavy market is “back on the front line of the global AI trade’s repricing”.
“The divergence on Wall Street, where tech heavyweights are losing ground even as broader market breadth improves, suggests investors are rotating away from crowded AI trades rather than abandoning equities altogether.”
Brent crude steadied after plunging almost 8% on Nov 2, as the US and Iran signalled a willingness to pursue peace talks as the war in the Middle East enters its ninth month.
The global benchmark was near US$105 a barrel. West Texas Intermediate was below US$97 after its biggest decline in three months on Nov 2.
Iran’s President Masoud Pezeshkian said his government had been granted more authority by the nation’s supreme leader to negotiate, while US President Donald Trump hinted at progress in talks. Still, simmering hostilities are keeping the market on edge.
Apple’s shares fell in late US trading after the company delivered a mixed outlook to investors in its first quarterly report under chief executive John Ternus, with narrower profit margins overshadowing an upbeat sales forecast.
Elsewhere, Anthropic disclosed a twelvefold rise in quarterly revenue while outlining plans to spend more than US$895 billion (S$1.15 trillion) in the coming years.
China stimulus
China’s CSI 300 Index slipped 0.1% amid scepticism about the authorities’ latest market support measures. The two liquidity-injection tools – a swop facility and relending operations to encourage more stock purchases – reappeared with some adjustments as the authorities sought to bolster market stability and confidence.
Chinese shares have been mired in a slump since the summer, weighed down by a weak economy and doubts over AI earnings. Previous attempts to revive the market – including a round of buying by the so-called national team starting in July, and regulatory guidance to curb selling in October – have fallen short.
Elsewhere, a Bloomberg gauge of the dollar edged higher, while US Treasury 10-year futures fell 3/32. There was no trading of cash Treasuries in Asia owing to the holiday in Japan.
Australia’s dollar fell after the central bank raised its key interest rate to an 18-year high, as economists forecast, in a split vote. The Aussie dropped as much as 0.5% to 69.99 US cents.
US job openings data due on Nov 3 is expected to show that listings edged higher in September, while weekly jobless claims due on Nov 5 are seen remaining near historically low levels. Economists expect the Nov 6 payrolls report to show US job growth more than doubled to 65,000 in October, with the unemployment rate holding at 4.2%.
Matt Maley, chief market strategist at trading firm Miller Tabak, said: “It’s going to be an extremely interesting week in the markets. We’ll have political issues to decipher as well as geopolitical ones. And growing doubts about AI investment returns will likely matter much more than historical patterns in determining the market’s direction going forward.” BLOOMBERG