Asian stocks opened lower after a selloff in US chipmakers deepened, overshadowing a plunge in oil prices on optimism over diplomatic progress toward ending the war in Iran.
The MSCI Asia Pacific gauge dropped 0.4% with South Korea’s Kospi Index sliding almost 3%. In the US, a gauge of chipmakers extended a three-day rout to 12% and the Nasdaq 100 sank 10% from its peak, entering a technical correction. In a sign some investors are looking to buy on dips, US stock futures gained. Japan is closed for a holiday.
In Asia, attention will also turn to Chinese equities after the central bank said it will encourage financial institutions to make greater use of stock-support tools and optimize their terms as authorities seek to bolster market stability.
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Apple Inc.’s shares fell in late US trading after the company delivered a mixed outlook to investors in its first quarterly report under Chief Executive Officer John Ternus, with narrower profit margins overshadowing an upbeat sales forecast. Elsewhere, Anthropic PBC disclosed a twelve-fold increase in quarterly revenue while outlining plans to spend more than $895 billion in the coming years.
US oil edged lower early Tuesday after global benchmark Brent crude slumped 7.6% to close at $104.77 a barrel as traders assessed signs of progress toward ending the conflict, a day before Americans vote in the midterm elections. A Bloomberg gauge of the dollar fell on Monday and longer-maturity Treasuries outperformed.
Easing geopolitical tensions are lowering energy prices and inflation risks, yet the drop in crude has so far failed to revive appetite for technology shares as concerns over AI spending and stretched valuations persist.“Lower oil should be a tailwind for tech, but the fact that stocks could not hold the open even with crude plunging shows how little conviction is left even after last week’s carnage,” said Dave Mazza, chief executive officer at Roundhill Financial.
Iranian President Masoud Pezeshkian said his government had been granted more authority by the country’s supreme leader to pursue peace talks, while President Donald Trump hinted at progress in negotiations.
“They want to make a deal, and that could happen,” Trump told reporters in Washington. He added that oil prices had fallen because “it looks like that’s coming together very nicely” and “people found out about it.”
Moments later, Trump mouthed “No” when a reporter shouted a question about whether he would resume military strikes on Iran after Tuesday’s midterm elections.
China Stimulus
While the Nasdaq Golden Dragon China Index rose 2.3% in US trading after the latest stimulus announcements, that was only the biggest gain since Oct. 9 and analysts including Citigroup Inc. economist Xiangrong Yu said the measures should help stabilize the market rather than trigger a durable rally.
Chinese shares have been mired in a slump since the summer, weighed down by a weak economy and doubts over AI earnings. Previous attempts to revive the market — including a round of buying by the so-called national team starting July, and regulatory guidance to curb selling last month — have fallen short. The CSI 300 benchmark fell 8.5% in October in its worst month in more than a decade.
Concerns over AI spending were also in focus as big technology companies returned to US bond markets to fund their investment plans. After an almost three-month borrowing drought, they’re flooding back in.
Oracle Corp. is selling $10 billion of bonds alongside an equal amount of equity, while Meta Platforms Inc. is eyeing at least $20 billion from a potential sale in multiple currencies. Microsoft Corp. sold $25 billion of bonds Thursday, its first US offering since 2017, while Alphabet Inc. tapped Europe’s bond market Monday for the second time this year.
The economic calendar adds another potential catalyst for the markets. US manufacturing activity picked up in October, supported by the strongest increase in production in nearly five years, while investors are looking ahead to a series of labor-market reports.
US job openings data due Tuesday are expected to show that listings edged higher in September, while weekly jobless claims Thursday are seen remaining near historically low levels. Economists expect Friday’s payrolls report to show job growth more than doubled to 65,000 in October, with the unemployment rate holding at 4.2%.”
“It’s going to be an extremely interesting week in the markets,” said Matt Maley at Miller Tabak. “We’ll have political issues to decipher as well as geopolitical ones. And growing doubts about AI investment returns will likely matter much more than historical patterns in determining the market’s direction going forward.”
