Asian stock markets experienced a downturn on Wednesday, mirroring a selloff in the United States as investors questioned whether the recent artificial intelligence-driven rally that boosted the bull market still has further potential.
Equity benchmarks in Sydney, Tokyo, and Seoul all registered declines, with futures indicating further losses in Hong Kong.
S&P 500 futures remained relatively unchanged after the benchmark index dropped 0.8% on Tuesday.
Meanwhile, US Treasuries held steady in Asia, and oil prices attempted to recover some of their losses from the previous day.
The semiconductor sector faced broader weakness, with notable declines in Asian chip manufacturers, including SK Hynix Inc. and Samsung Electronics Co. Ltd.
These declines were influenced by a drop in shares of Dutch giant ASML Holding NV, which cut its 2025 outlook.
In the US, Nvidia Corp. lost 4.7%, signaling potential challenges for major industry leaders.
“Some disappointments over the ASML new orders are surely a negative factor for today’s Asian market,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management.
“Now that we are in the earnings season, company announcements on earnings and outlooks are likely to become a source of volatility.”
In the US, the S&P 500 slipped to around 5,815, and the Nasdaq 100 lost 1.4%.
The dollar steadied after climbing to its highest level in about two months after former President Donald Trump defended proposals to dramatically raise tariffs on foreign imports.
Treasury 10-year yields declined seven basis points on Tuesday.
Investor sentiment turned bearish, according to an investor survey by Bank of America Corp.
Allocations to equities surged, while bond exposure sank, and cash levels in global portfolios fell to 3.9% in October from 4.2% last month, triggering a “sell signal,” strategists led by Michael Hartnett wrote.
In Asia, traders are closely watching Chinese stocks after the housing minister announced a press briefing on Thursday, expected to provide more details of support measures for the property sector.
A gauge of US-listed Chinese shares slumped almost 6%, while the CSI 300 index lost more than 3% on Tuesday as doubts resurfaced about Beijing’s stimulus blitz.
Additionally, New Zealand’s dollar and sovereign bond yields fell after the annual inflation rate declined sharply in the third quarter, returning to the central bank’s target band for the first time in more than three years.
Oil market update
Oil prices climbed back after a more than 4% decline on Tuesday, as Israel announced it would make its own decision on how to attack Iran, raising the possibility that energy infrastructure may be targeted.
Crude oil prices have experienced significant volatility this month, influenced by geopolitical tensions in the Middle East and China’s attempts to stimulate growth as the largest oil importer.
Traders are also assessing market forecasts for the coming year, with the International Energy Agency warning of a potential global supply glut.
“It looks like dealers simply have their machines tied to oil futures these days,” said Christoph Rieger, head of rates and credit research at Commerzbank AG.
“Whether it makes sense to adjust your long-term inflation view on the back of this is a different question.”
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