Asian markets dip as investors weigh tech earnings, Gulf tensions
Asian stocks struggled to stay above water in early trade on Thursday, with MSCI's broadest index of Asia-Pacific shares outside Japan down 0.2%, on track for a fourth straight week of decline. Japan's Nikkei stock index gave up earlier gains to trade 0.4% lower, while Korean shares were down more than 1%.
US stock futures, the S&P 500 e-minis, were down 0.4% at 7,765.8. Overnight, the tech-heavy Nasdaq led Wall Street to a higher close as better-than-expected earnings reports from market heavyweights helped ease some concerns over the sustainability and profitability of massive AI build-outs. SpaceX posted its first profit as a public company, Meta reported third-quarter revenue that beat expectations, while AI server maker Super Micro forecast quarterly revenue and profit margin that both topped estimates.
SpaceX shares rallied 7.8%, and Super Micro shares jumped 9.6%, making it among the S&P 500's top gainers; the report also benefited peers HPE, which rose 3.7%, and Dell, which rose 5.3%. Yet Meta's plan to issue non-voting Class C common stock drew renewed scrutiny on AI spending, and lingering concerns over AI kept Asian sentiment fragile.
Brent crude rose 1.1% to $110.03 a barrel, near a five-month high. The US ordered diplomats to leave Saudi Arabia amid Houthi strikes, while the New York Times reported the US and Israeli militaries had developed specific plans for renewed attacks on Iran after the US midterm elections, which take place on November 3.
With a lot of noise in markets, investors are still digesting the mix of tech earnings and Gulf uncertainty. Kyle Rodda, senior financial market analyst at Capital.com, said the market is only just entering the "meaty part" of earnings season, at the same time investors are tackling uncertainty from an upcoming Federal Reserve decision, geopolitical risks, and the US midterms. In a sign of subdued risk sentiment, the yield on benchmark 10-year Treasury notes was down 4.2 basis points at 5.1065%, while the yield on 30-year notes sat at a one-week low. Further tech earnings, any escalation in the Middle East, and Iran-related headlines after the November 3 US midterms will likely guide risk appetite from here.