By Gregor Stuart Hunter
SINGAPORE, Nov 3 (Reuters) – Asian tech stocks came under fresh pressure on Tuesday as investors fretted over AI spending and earnings, while oil prices stabilised after the previous session’s tumble ahead of the start of voting for the US midterm elections.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.4% at the lowest level since October 23, led by a decline of as much as 4.1% in South Korean shares.
European futures fell 0.9%, German DAX futures slid 0.8% and FTSE futures were 0.2% lower.
Taiwanese shares slid 3.3%, putting the local benchmark on track to confirm a technical correction after extending losses to 13.1% from a record high in early October.
Shares in China fell 1.4%, with investors disappointed at the latest moves by authorities to shore up a market that is the year’s weakest performer among major indexes.
S&P 500 e-mini futures edged lower for a fourth consecutive day, off 0.1%, while Japanese markets were closed for a holiday.
“Within Asia, Korea and Taiwan equity outflows continue to dominate, given rising concerns around sustainability of the tech cycle,” Bank of America analysts wrote in a note.
Australian shares bucked the trend, rising 0.3%, and the Aussie dollar slipped 0.3% to $0.6978 after the Reserve Bank of Australia lifted its cash rate target, as expected, but with a 6-3 split vote and hints it might be on hold for a while.
Overnight, stocks on Wall Street edged lower, with the S&P 500 slipping 0.5%.
Apple shares extended losses, falling 2.8% in after-hours trading after the iPhone maker on Monday forecast lower gross margins for the crucial holiday quarter, citing rising memory-chip costs, and projected services revenue growth that fell well short of Wall Street expectations.
MIDTERM ELECTIONS
Investors are also preparing for voting in the US midterm elections, where President Donald Trump’s Republican Party is facing a challenge to keep its hold on Congress.
“Tuesday will be nothing more than the day ahead of a much bigger day,” ING analysts wrote in a note. By tomorrow, the market will have guidance on the midterm implications and the US Treasury’s quarterly refunding announcement, they wrote.
The yield on the US 10-year Treasury bond was up 2.1 basis points at 4.913%.
Opinion polls favour the Democrats to win the House, though the Senate remains too close to call. Prediction market sites Polymarket and Kalshi currently assign probabilities of 77% and 76%, respectively, that the Democrats will control the Senate.
A surprise Republican sweep would likely lift yields and the dollar, said Steve Englander, co-head of FX research at Standard Chartered.
Investors are watching the race for Texas governor because the Democratic challenger Gina Hinojosa is proposing a moratorium on data centre building, said Brent Donnelly, president at FX analytics firm Spectra Markets.
Oil prices steadied after a fall, with Brent crude up 0.5% at $105.30 in Asian trading as investors weighed the state of peace talks between the US and Iran.
The US carried out strikes on Iran’s Qeshm Island in the Strait of Hormuz, a US official told Reuters on Monday, confirming an earlier Wall Street Journal report.
Against the Chinese yuan, the US dollar was 0.4% stronger at 6.6720 yuan after the People’s Bank of China said it would raise the foreign exchange reserve ratio, a move aimed at putting the brakes on a long rally in the yuan.
Cryptocurrencies remained choppy after last week’s Binance hack, as customers withdrew a net $4.72 billion of funds. Bitcoin nudged 0.1% higher to $76,822.21 and ether declined 0.2% to $2,250.41.
(Reporting by Gregor Stuart Hunter; Editing by Muralikumar Anantharaman and Jamie Freed)
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