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Late AI-related earnings weigh on Asian markets

Caution over AI profitability resurfaced after Wednesday’s US trading session, sending Asian stocks lower on Thursday, particularly semiconductor shares. Wall Street and European markets had finished Wednesday higher, buoyed by encouraging SpaceX results before subsequent technology reports dampened sentiment. Domestic economic challenges compounded the losses in China, where the benchmark CSI 300 entered a bear market. Oil prices also climbed as reports of plans for fresh US and Israeli strikes against Iran heightened fears of further conflict in the Middle East.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

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Asian stocks fall after late US earnings

Asian equities declined on Thursday as US technology results released after Wednesday’s market close revived concerns about returns on AI investment, with South Korea’s KOSPI falling 4%, Japan’s Nikkei 225 losing 2.5% and Hong Kong’s Hang Seng dropping 3.2%. Semiconductor shares were among the hardest hit, with South Korean chipmakers SK Hynix and Samsung Electronics down 6% and 4.4%, respectively, after US semiconductor equipment supplier Lam Research issued a weaker-than-expected earnings forecast. Mainland China’s CSI 300 fell 2.1%, taking its decline from June’s peak to around 20% and into bear-market territory after ten consecutive weekly losses. Chinese equities faced additional pressure from weak corporate earnings, fading stimulus hopes and subdued consumer demand, while excess industrial capacity and intense competition continued to squeeze profit margins.

Oil rises on renewed Iran strike concerns

Brent crude oil futures climbed 2.1% to USD 111.15 per barrel, while West Texas Intermediate (WTI) futures rose 2% to USD 99.04, amid concerns about renewed military action against Iran. The New York Times reported that US and Israeli forces were preparing strikes for after November’s US midterm elections, citing unnamed US officials. The US also instructed non-essential government personnel and their families to leave Saudi Arabia as attacks by Iran-aligned Houthi forces on civilian targets intensified. US households may nevertheless be better placed to absorb higher energy costs than in previous decades, with petrol accounting for roughly half the share of disposable income it represented a decade ago, according to an investment manager cited in the report. The US Dollar Index declined 0.2% to 101.58, while gold fell 1.5% to around USD 4080 per ounce. Bitcoin gained 0.2% to around USD 82,900.

US stocks gain on SpaceX results

US equities advanced during Wednesday’s session as strong results from aerospace and artificial intelligence group SpaceX eased concerns about returns on AI investment, with the Nasdaq 100 gaining 1.1% to 29,822.52 points. The Dow Jones Industrial Average rose 0.7% to 52,856.09 points, while the S&P 500 added 0.6% to 7757.17 points. SpaceX shares surged 7.8% after the company returned to a quarterly profit and reported stronger-than-expected revenue growth, while merger discussions with electric vehicle maker Tesla helped lift the latter’s shares by 3.4%. Computer and server manufacturer Supermicro gained 9.6% following strong results supported by AI demand, whereas streaming company Netflix fell 5.3% after reporting its slowest growth in years.

Meta rises, Tesla reverses after-hours gains

Facebook parent Meta Platforms initially gained more than 3% in after-hours trading on Wednesday after reporting record third-quarter revenue of USD 64 billion, up 25% year-on-year and above market expectations. The company also announced a two-for-one share split involving non-voting shares, while earnings per share rose to USD 3.83 from USD 1.05 a year earlier despite a legal charge related to teenagers’ mental health. Electric vehicle maker Tesla initially rose more than 1% after reporting better-than-expected third-quarter results, but reversed course to trade 3.1% lower as management’s caution about robotics and chipmaking overshadowed the earnings. Adjusted earnings per share reached USD 0.48 on revenue of USD 28.05 billion, while chief executive Elon Musk warned that substantial development work remained on its humanoid robot and that its planned chipmaking venture could cost more than USD 100 billion over the longer term.

European stocks gain, EssilorLuxottica surges

European equities rose on Wednesday as strong quarterly results from US aerospace and artificial intelligence group SpaceX supported technology shares, with the Euro Stoxx 50 gaining 1.5% to 6213.45 points and reversing its earlier losses this week. Switzerland’s SMI advanced 0.5% to 14,552.39 points. French eyewear group EssilorLuxottica surged 15.5% after stronger-than-expected third-quarter performance in its traditional glasses business eased concerns about weakening demand, while software group SAP gained 3.5% ahead of its earnings release. Supermarket chain Carrefour fell 13.8% after cutting its annual outlook because of unrest in France, while tyre manufacturer Michelin lost 7.2% following disappointing third-quarter results.

UK inflation rises, strengthening rate hike expectations

UK annual inflation accelerated to 3.5% in September from 3.1% in August, exceeding market forecasts and reaching its highest level in almost a year, according to data released on Wednesday. Motor fuel prices increased by 29.8% year-on-year, driving the rise as Britain’s dependence on imported energy left it exposed to supply disruptions linked to the US-Iran war. Accelerating services inflation also raised concerns that energy-related price pressures were spreading more widely through the economy. Markets anticipate a quarter-percentage-point Bank of England rate increase to 4% next month, with most traders expecting another increase of the same size in December.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Comcast, Hermès, Honeywell, Kering, Lockheed Martin, L’Oréal, Nestlé, Nokia, Procter & Gamble, Union Pacific, and Vinci.

Economic data in focus: US weekly initial jobless claims (14:30).

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