Asian Markets Lose Their Nerve as AI Hopes Clash With Gulf Risks
Asian stocks faced challenges in early trading on Thursday, with optimism surrounding tech earnings offering only temporary relief, as persistent worries regarding AI and instability in the Gulf continued to weigh on market sentiment. MSCI’s broadest index of Asia-Pacific shares outside Japan experienced a decline of 0.2 percent, positioning it for a fourth consecutive week of downturn. Japan’s Nikkei stock index relinquished earlier gains, now trading 0.4 percent lower, while Korean shares experienced a decline of over 1 percent. US stock futures, specifically the S&P 500 e-minis, experienced a decline of 0.4 percent, settling at 7,765.8. Overnight, the tech-heavy Nasdaq propelled Wall Street to a higher close, as better-than-expected earnings reports from market heavyweights alleviated some concerns regarding the sustainability and profitability of extensive AI build-outs.
Space X reported its inaugural profit as a publicly traded entity, Meta disclosed third-quarter revenue that exceeded projections, and AI server manufacturer Super Micro anticipated quarterly revenue and profit margins that surpassed estimates. However, Meta’s plan to issue non-voting Class C common stock has attracted renewed scrutiny regarding its expenditures on AI. “There’s a lot of noise out there at the moment and investors are still digesting this morning’s results,” said Kyle Rodda. “Also, we’re really only at the start of the meaty part of earnings season, which is coming at the same time that investors are tackling the uncertainty from an upcoming Fed decision, geopolitical risks, and US mid-terms.”
In a manifestation of tempered risk appetite, the yield on benchmark 10-year Treasury notes decreased by 4.2 basis points to 5.1065 percent, whereas the yield on 30-year notes reached a one-week low of 5.3968 percent. Meanwhile, Brent crude increased by 1.1 percent to $110.03 a barrel, approaching a five-month peak. The US has mandated the departure of diplomats from Saudi Arabia in response to Houthi strikes. Concurrently, the source has disclosed that the US and Israeli military forces have formulated detailed strategies for potential renewed assaults on Iran following the midterm elections scheduled for November 3. In currencies, the dollar index, which monitors the greenback against a selection of currencies from other significant trading partners, decreased to 102.2.
The euro remained relatively stable at $1.1231. The yen remained stable at 158.125, following indications from Deputy Bank of Japan Governor Ryozo Himino regarding a potential increase in borrowing costs. The Korean won exhibited little movement at 1325.9, following the Bank of Korea’s decision to maintain its benchmark interest rate at 3.00 percent on Thursday. Gold was slightly lower at $4115.5 per ounce. Bitcoin experienced a decline of 0.4 percent, settling at $84,284.05, whereas ether saw a decrease of 0.6 percent, priced at $2,476.34.
