Disappointing earnings prospects from Apple (NASDAQ: AAPL), combined with weakness in US chip stocks overnight, weighed broadly on Asia-Pacific markets on Tuesday. Crude oil prices fell sharply amid easing geopolitical tensions, while the dollar and US Treasury markets remained relatively stable.
In early Asian trading on Tuesday, the MSCI Asia-Pacific Index dropped 0.6%, and the MSCI Emerging Markets Asia Index fell more than 1%. South Korean stock indices each plunged over 3%, with the semiconductor hardware supply chain, new energy battery materials, and oil refining sectors all experiencing deep, broad-based pullbacks.
In bond markets, the Australian 10-year government bond yield rose 1 basis point to 5.14%. Previously, the market widely expected the Reserve Bank of Australia to raise rates by 25 basis points at its rate decision, lifting the cash rate to a 18-year high of 4.85%. Investors will closely watch RBA Governor Michele Bullock's press conference remarks to gauge the future policy path.
Investor attention is now shifting to the upcoming US midterm elections, with multiple risk factors interweaving to keep market sentiment cautious. Prediction markets show the Democratic Party has nearly a 75% probability of winning the Senate. JPMorgan warned that if Democrats sweep both the Senate and the House, AI stocks could face selling pressure.
Carson Chief Market Strategist Ryan Detrick said markets may find relief once election results are finalized. "There is anxiety ahead of the vote, and once the dust settles, the market tends to perform well," he noted, but added that if either side achieves an overwhelming victory, the market would also struggle to digest it.
Miller Tabak analyst Matt Maley said:
This will be an extremely critical week for the market, with political and geopolitical factors overlapping, and doubts surrounding AI investment returns may influence market direction more than historical patterns.
South Korea Leads Asia-Pacific Declines
Hit by the dual shocks of a sharp overnight selloff in US semiconductor stocks and a heavy drop in international crude oil prices, selling pressure in Asia-Pacific markets was concentrated, with the semiconductor hardware supply chain, new energy battery materials, and oil refining sectors experiencing deep, broad-based pullbacks.
The MSCI Asia-Pacific Index fell 0.6%. Australia's S&P/ASX 200 Index was roughly flat, showing relative resilience. Japanese markets were closed for a public holiday.
South Korea's KOSPI posted the most significant decline, falling more than 3.7% at the open before narrowing losses to 2.7%. The small-cap Kosdaq index also dropped more than 2.5%.
Directly transmitting the sharp declines from US memory chain and optical communications giants, South Korean domestic semiconductor upstream suppliers fell. Leading high-end printed circuit board and packaging substrate maker Daeduck Electronics plunged 11.16% in a single day; semiconductor test equipment maker DI dropped 9.88%.
The sharp drop in oil prices directly pressured refining margin expectations, with South Korean refining giant Ssangyong Oil plunging 10.46%; liquefied gas distributor SK GAS fell 9.00% in a single day. In addition, traditional consumer goods producer Cheonsang Food dropped 14.42%, while its parent company SEMPIO also fell 9.53%.
Samsung Electronics fell as much as 5%, and SK Hynix also dropped sharply, with both chip giants dragging down the South Korean stock index.
Crude Oil Extends Losses, Gold Edges Lower
Brent crude oil continued to fall 0.2% on Tuesday to $104.61 per barrel, after a single-day drop of 7.6% previously.
Iran's president said he has been authorized by the Supreme Leader to expand negotiating authority, and US President Trump also hinted at progress in related talks. The easing of geopolitical tensions is the main driver behind the crude oil plunge.
In bond markets, the Australian 10-year government bond yield rose 1 basis point to 5.14%. Previously, the market widely expected the Reserve Bank of Australia to raise rates by 25 basis points at its rate decision, lifting the cash rate to a 18-year high of 4.85%. Investors will closely watch RBA Governor Michele Bullock's press conference remarks to gauge the future policy path.
In currency markets, the dollar index was roughly flat, the euro held near $1.1181, and the yen traded at 157.92 per dollar.
Bitcoin rose slightly by 0.2% to $76,860. Spot gold edged down 0.08% to $3,943.39 per ounce.
Comments