Asian equities experienced a broad decline on Wednesday, influenced by ongoing tensions in the Middle East, changes in U.S. interest rate expectations, and reports indicating potential U.S. limitations on export licenses for AI chips to certain nations.
French luxury conglomerate LVMH reported its first quarterly sales downturn since the pandemic, heightening concerns regarding reduced consumer demand in China and other regions.
Shares of chip manufacturers led regional declines following a warning from ASML, Europe's largest tech company, regarding weak semiconductor demand; its clientele includes TSMC, Samsung, and SK Hynix.
The U.S. dollar remained near two-month highs against major currencies, buoyed by speculation about a potential second term for Donald Trump and the anticipation that the Federal Reserve will implement moderate interest rate reductions.
Current market sentiment suggests a 95 percent probability of a 25-basis-point rate cut from the Federal Reserve next month, succeeding a significant 50-bps reduction in September.
Raphael Bostic from the Atlanta Fed expressed on Tuesday that he anticipates just one more rate cut of 25 basis points this year. In contrast, Mary Daly from the San Francisco Fed mentioned that "one or two" cuts in 2024 would be "reasonable."
Gold saw its second consecutive session of gains, nearing a three-week high, while oil prices rebounded slightly after a more than 4 percent drop on Tuesday.
China's Shanghai Composite Index concluded slightly higher following a volatile session, as investors awaited detailed information on upcoming stimulus measures. A briefing by China's housing minister scheduled for Thursday could potentially offer further insights into plans to promote the "steady and healthy" development of the property sector.
Hong Kong's Hang Seng Index dipped 0.16 percent to 20,286.85 after a turbulent trading day.
Japanese markets faced a downturn following comments from Bank of Japan board member Seiji Adachi about the ongoing normalization of monetary policy, suggesting that premature rate hikes should be avoided given the uncertainties in global economic conditions and domestic wage growth. Market participants also responded to data showing that machinery orders in Japan declined more than anticipated in August.
The Nikkei Average dropped 1.83 percent to close at 39,180.30, while the broader Topix Index fell 1.21 percent to 2,690.66. Chip-related stocks such as Tokyo Electron, Screen Holdings, and Lasertec Corp saw declines ranging from 9 to 13 percent.
Stocks in Seoul also declined significantly, with the Kospi Average falling 0.88 percent to 2,610.36. Samsung Electronics decreased by 2.5 percent, and SK Hynix fell 2.2 percent.
Australian markets closed in negative territory as mining stocks were affected by prevailing growth concerns. However, gold stocks surged, with Evolution Mining climbing 6.8 percent following the release of its production figures.
The benchmark S&P/ASX 200 fell 0.41 percent to 8,284.70, while the broader All Ordinaries Index finished 0.49 percent lower at 8,556.60.
In New Zealand, the benchmark S&P/NZX-50 Index declined by 1.55 percent to 12,641.32, despite data indicating a sharp decrease in national inflation during the third quarter, potentially paving the way for significant interest rate cuts in the coming months.
In the United States, stocks closed lower overnight after United Health reduced its full-year earnings forecast, and data revealed an unexpected contraction in manufacturing business activity in New York State for October.
A pessimistic outlook from ASML Holding and fears of stricter U.S. restrictions on chip sales led to a sell-off in the technology sector, while energy stocks followed oil prices downward.
The tech-focused Nasdaq Composite fell by 1 percent, with both the Dow and the S&P 500 shedding around 0.8 percent.
