Asian equities declined on Wednesday following disappointing earnings from ASML, Europe’s largest tech firm, which impacted chip stocks globally. Meanwhile, expectations of a modest interest rate cut by the Federal Reserve supported the dollar.
Additionally, lackluster earnings from French luxury brand LVMH indicated a decline in demand for luxury goods in China, dampening some of the optimism generated by recent stimulus measures.
South Korean tech stocks fell by 0.6 percent, while chip stocks contributed to a 1.8 percent drop in Japan’s Nikkei index. Taiwan’s stocks also decreased by 1.2 percent, resulting in a 0.32 percent decline in MSCI’s broadest index of Asia-Pacific shares outside Japan.
Matt Simpson, senior market analyst at City Index, said investors are likely questioning how exposed to risk they really want to be, given there are risk events and a US election looming on Nov. 5.
“I expect investors to become increasingly twitchy as we head towards November 5th, and keen that book profits at frothy levels.”
ASML, whose customers include AI chipmaker TSMC, logic chip makers Intel and Samsung as well as memory chip specialists Micron and SK Hynix, forecast lower than expected 2025 sales.
The Dutch chip equipment maker said despite a boom in AI-related chips, other parts of the semiconductor market are weaker for longer than expected, leading to customer cautiousness.
“The AMSL numbers were not good and suggest that all is not well in semiconductor chips outside of AI,” said Nick Ferres, CIO at Vantage Point Asset Management in Singapore.
A Bloomberg News report that US officials have been considering implementing a cap on export licenses for AI chips to specific countries also weighed on sentiment.
The dour mood meant Chinese stocks fell in early trading as investors awaited concrete details on stimulus plans. The blue-chip CSI300 index fell 0.6 per cent, while Hong Kong’s Hang Seng Index was 0.7 per cent lower in early trading.
Investor focus is now on Thursday when China will hold a press conference to discuss promoting the “steady and healthy” development of the property sector.
“We believe investors should view the policy announcements since Sept. 24 as an integrated plan rather than isolated messages – the policy pivot looks very much here to stay,” HSBC strategist Steven Sun said in a report.
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