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Summary:
- Asian equities mostly fell after Thursday’s US chip sell-off: South Korea’s KOSDAQ dropped 3.5%, the Kospi 2.2%, the Nikkei 1.4% and the Shanghai Composite 1.3%, while the Hang Seng edged up 0.25%.
- Gold traded below $4,000 an ounce for the first time since July but did not extend its losses.
- Oil traded in a narrow range near recent highs, after Brent closed at its highest since May on Thursday.
- Major currencies were range-bound, with the yen firming modestly after Japan’s inflation data.
- Japan’s core CPI rose 2.1% in September, back above the BoJ’s target, and the measure excluding fresh food and fuel beat forecasts at 2.4%. Japan’s flash PMI held at 52.3.
- Australia’s flash composite PMI fell into contraction for the first time in five months.
- In company news, OpenAI is reportedly near a $30 billion raise, SK hynix dropped plans for a US Solidigm IPO, and Western Digital posted a sharp revenue jump.
Equities
Asian stock markets mostly fell on Friday as a sell-off in US semiconductor shares spread to the region. South Korean markets, which have heavy weightings in chipmakers, led the declines: the tech-focused KOSDAQ fell 3.5% and the benchmark Kospi lost 2.2%. Japan’s Nikkei 225 dropped 1.4% and China’s Shanghai Composite fell 1.3%. Hong Kong’s Hang Seng was the exception, edging up 0.25%.
The losses followed a sharp fall on Wall Street on Thursday, when the Philadelphia semiconductor index dropped 6.7%, its biggest daily decline since June. The Nasdaq fell more than 2.5% after earnings from major technology companies, including Meta’s spending plans, renewed concerns about returns on AI investment.
Oil
Oil prices traded in a narrow range in Asian hours, holding near recent highs. Brent crude closed around $113 a barrel on Thursday, its highest level since early May, after reports that the US and Israel had drawn up plans for renewed strikes on Iran after next month’s US midterm elections.
Supply concerns in fuel markets also remained in focus. President Donald Trump invoked the Defense Production Act for domestic oil production and refining as high fuel prices weigh on voters ahead of the November 3 elections. Separately, Bloomberg reported that Russia’s Rosneft is deliberately slowing repairs at refineries damaged by repeated Ukrainian drone strikes, which could keep Russian fuel exports constrained.
Gold
Gold fell below $4,000 an ounce for the first time since July, though it did not follow through lower in Asian trading. There was no fresh catalyst for the move. The metal has been pressured by elevated bond yields, a firm dollar and expectations of further Federal Reserve tightening tied to high oil prices. It is now roughly a quarter below its January peak of more than $5,400. Longer-term support continues to come from central bank buying and investors seeking diversification.
FX
Major currency pairs were range-bound. The yen firmed modestly after Japan’s inflation data. USD/JPY dropped to around 156.25 before recovering back to 157.00.
Japan
Japan’s core consumer inflation rose 2.1% in September from a year earlier, matching forecasts and accelerating from 1.7% in August. It was the first reading above the BoJ’s 2% target in nine months. A measure excluding fresh food and fuel, which the central bank watches closely, rose 2.4%, above forecasts of 2.3%. Goods and services inflation both accelerated, despite government fuel subsidies.
The BoJ is widely expected to keep rates at 1.25% at its meeting ending October 30, though it may raise its inflation forecasts. Many analysts expect a hike to 1.50% in December. Economy Minister Minoru Kiuchi said conditions have not yet been met for the government to declare an end to deflation.
Japan’s flash composite PMI was unchanged at 52.3 in October. Services activity strengthened, while manufacturing output grew at its slowest pace in seven months. Job creation slowed to a 14-month low, and input cost inflation edged higher.
Australia
Australia’s flash composite PMI fell to 47.7 in October from 51.3, signalling the first contraction in private sector output in five months. Services activity declined for the first time since May, as firms cited weaker confidence, higher borrowing costs and inflation pressures. Input costs rose at the fastest pace since May, and businesses continued to pass higher costs on to customers.
Company news
OpenAI is close to finalising a funding round of up to $30 billion at a pre-money valuation of $1.25 trillion, led by investors from the United Arab Emirates, according to reports. The valuation is below the roughly $1.4 trillion the company had reportedly sought earlier this month.
SK hynix said its Solidigm unit has ended a review of a US initial public offering, citing market conditions and share price trends. The listing had been considered to help fund a new US plant. SK hynix shares fell as much as 4.2% in early Seoul trading before swinging between gains and losses.
Western Digital reported fiscal first-quarter revenue up about 55% to $4.38 billion, driven by AI-related storage demand and higher prices, and guided above forecasts for the current quarter. Its shares nonetheless fell in after-hours trading amid the broader sell-off in AI-linked stocks.
This article was written by Eamonn Sheridan at investinglive.com.