Asian equities experienced a downturn on Wednesday, largely driven by disappointing earnings from Europe’s largest tech firm, ASML, which negatively impacted chip stocks globally. Additionally, expectations of a gradual rate cut path from the Federal Reserve provided some support for the U.S. dollar.
Market sentiment was further dampened by lackluster earnings from French luxury powerhouse LVMH, which indicated a decline in demand for luxury goods in China, undermining optimism surrounding recent stimulus measures in the region.
Tech-heavy South Korean stocks dipped by 0.6%, while Japan’s Nikkei index fell 1.8%, primarily due to a sharp decline in chip stocks. Taiwan’s stock market also slipped by 1.2%. As a result, MSCI’s broad index of Asia-Pacific shares, excluding Japan, was down 0.32%.
Matt Simpson, a senior market analyst at City Index, noted that investors are becoming increasingly cautious. “With significant risk events and the U.S. election approaching on November 5, I expect investors to be more jittery and eager to lock in profits at inflated levels,” he said.
ASML, whose clients include AI chipmakers like TSMC and major companies such as Intel, Samsung, Micron, and SK Hynix, projected lower-than-expected sales for 2025. Despite a surge in demand for AI-related chips, the Dutch semiconductor equipment manufacturer indicated that other segments of the market are underperforming for longer than anticipated, prompting caution among customers.
“The ASML numbers were disappointing and suggest broader challenges in the semiconductor sector outside of AI,” remarked Nick Ferres, Chief Investment Officer at Vantage Point Asset Management in Singapore.
Adding to the negative sentiment was a Bloomberg News report suggesting that U.S. officials are considering imposing restrictions on export licenses for AI chips to specific countries.
The grim outlook affected Chinese stocks early in the trading session as investors awaited specific details regarding stimulus plans. The blue-chip CSI300 index dropped 0.6%, while Hong Kong’s Hang Seng Index fell 0.7% in early trading.
Investor attention is now turned toward a press conference scheduled for Thursday, where China will discuss initiatives to promote the “steady and healthy” development of the property sector.
HSBC strategist Steven Sun emphasized that investors should interpret the policy announcements made since September 24 as part of a cohesive strategy rather than isolated actions. “The policy pivot appears to be here to stay,” he stated in a report.
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