Asian markets dip as tech earnings support fades and Gulf risks weigh on sentiment

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Asian markets dip on Gulf risk

Highlights

MSCI Asia-Pacific index dips 0.2%, Nikkei falls 0.4%, and Korean shares drop over 1% as tech earnings support wanes and regional risk rises.
Brent crude climbs 1.1% to $110.03 a barrel near a five-month high, as U.S.-Iran tensions intensify and diplomats exit Saudi Arabia following Houthi strikes.
Yen holds at 158.125 after Bank of Japan signals possible rate hikes, while Korean won stays muted at 1325.9 with Bank of Korea keeping rates at 3.00%.

Early trading pressure across equities and rates

As reported by Reuters, MSCI's broadest index of Asia-Pacific shares outside Japan falls 0.2% in early trade, putting it on track for a fourth straight week of declines. Japan's Nikkei gives up earlier gains to trade 0.4% lower, while Korean shares drop more than 1%.

U.S. stock futures also weaken, with S&P 500 e-minis down 0.4% at 7,765.8. Overnight on Wall Street, the Nasdaq leads a higher close after better-than-expected results from major technology companies help ease some investor concerns about the sustainability and profitability of large AI-related spending.

Space X posts its first profit as a public company, Meta reports third-quarter revenue above expectations, and AI server maker Super Micro forecasts quarterly revenue and profit margin ahead of estimates. Even so, Meta's plan to issue non-voting Class C common stock draws renewed scrutiny over AI spending, adding to investor caution as the busiest phase of earnings season begins.

Capital.com senior financial market analyst Kyle Rodda says markets are contending with heavy noise as investors digest earnings, while also facing uncertainty over the Federal Reserve's upcoming decision, geopolitical risks and U.S. mid-term elections. In fixed income, subdued risk appetite pushes the benchmark 10-year Treasury yield down 4.2 basis points to 5.1065%, while the 30-year yield touches a one-week low of 5.3968%.

Oil, currencies and regional policy signals

Energy markets remain supported by Middle East tensions, with Brent crude rising 1.1% to $110.03 a barrel, near a five-month high. The U.S. orders diplomats to leave Saudi Arabia amid Houthi strikes, while the New York Times reports that the U.S. and Israeli militaries have developed specific plans for renewed attacks on Iran after the U.S. mid-term elections on November 3.

In currency markets, the dollar index slips to 102.2 and the euro is little changed at $1.1231. The yen holds flat at 158.125 after Bank of Japan Deputy Governor Ryozo Himino signals readiness to raise borrowing costs, while the Korean won is muted at 1325.9 after the Bank of Korea leaves its benchmark interest rate unchanged at 3.00% on Thursday.

Elsewhere, gold edges slightly lower to $4,115.5 an ounce. Cryptocurrencies also soften, with bitcoin down 0.4% at $84,284.05 and ether 0.6% lower at $2,476.34.

In our earlier article on the S&P 500’s pullback, we examined how weakness in technology and semiconductor stocks, along with doubts about the durability of AI-related investment, pushed the index lower. We also noted that higher borrowing costs and rising Treasury yields amplified risk-off sentiment, leaving the S&P 500 trading below key short-term moving averages and making nearby support/resistance levels critical for the next move.

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