Singapore — Asian equities fell on Wednesday after a disappointing outlook from Europe’s biggest tech firm, ASML, dragged down chip stocks, while expectations that the US Federal Reserve would take a modest rate cut path propped up the dollar.
Also weighing on the market was a fall in quarterly sales for French luxury giant LVMH, which showed demand in China for luxury goods worsened, denting some of the enthusiasm about China spurred by stimulus measures.
Stocks in Japan, Taiwan and South Korea — all home to major chip firms — fell, down 1.7%, 1.2% and 0.6% respectively. The MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.31%.
ASML, whose customers include TSMC, Samsung and SK Hynix, forecast lower than expected 2025 sales, saying that despite a boom in AI-related chips, other parts of the semiconductor market had been weaker for longer than expected.
A Bloomberg News report that US officials have been considering implementing a cap on export licences for AI chips to specific countries also weighed on risk sentiment.
European stock markets were set for a weaker open, with Eurostoxx 50 futures 0.62% lower, German DAX futures dropping 0.2% and FTSE futures down 0.12%.
Matt Simpson, senior market analyst at City Index, said investors were likely to be questioning how exposed to risk they really want to be, given that there are risk events and a US election looming on November 5.
“I expect investors to become increasingly twitchy as we head towards November 5, and keen [to] book profits at frothy levels.”
In China, stocks were having a volatile day as investors await concrete details on stimulus plans. The blue-chip CSI300 index was last down 0.24%, while Hong Kong’s Hang Seng index was 0.88% higher.
Investors are focused on Thursday when China will hold a media conference to discuss promoting the “steady and healthy” development of the property sector.
“We believe investors should view the policy announcements since September 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.
Rising dollar
On the macro side, investors remain enthralled by US rates and shifting rate cut expectations after data underscored the resilience of the US economy and showed a slight rise in inflation.
Traders are currently pricing in 46 basis points (bps) of easing this year. The Fed started its easing cycle with an aggressive 50 bps cut in September.
Markets see a 95% chance of a 25 bps cut by the Fed in November, the CME FedWatch tool showed, compared to a 50% chance a month earlier when investors were leaning towards another 50 bps cut.
As a result, the dollar has surged in recent weeks, with the US dollar index, which measures the US unit versus major rivals, at 103.24, hovering near its highest levels since early August.
The euro loitered at about two-month lows and last fetched $1.0887 in early trading ahead of the European Central Bank’s policy meeting on Thursday, where the central bank is largely expected to cut rates again.
Sterling fell 0.38% to $1.3025 after data showed inflation in the UK for September came in below expectations.
Oil prices were steady after steep declines in the previous session as investors contended with uncertainty about tension in the Middle East and what it means for global supply.
Brent crude oil futures rose 0.4% to $74.53 a barrel. US West Texas Intermediate crude futures rose 0.44% to $70.89 per barrel.
Reuters
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