Market Overview
Asian markets presented a mixed picture on Thursday, grappling with divergent performances from major US technology companies. Microsoft’s strong earnings provided an offset, but Alphabet’s disappointing results weighed on sentiment, particularly impacting South Korean tech stocks like Samsung. The US Federal Reserve’s decision to hold interest rates steady, while maintaining a tightening bias, continued to be a key macroeconomic factor, leading investors to look ahead to crucial US inflation data and the Bank of Japan’s upcoming policy meeting. Australian equities concluded their session higher, buoyed by a rally in banks and real estate, though the consumer discretionary sector faced headwinds from signs of tightening household budgets.
Markets
Japanese and Australian equities closed higher on Thursday, while South Korean and Chinese markets ended lower. Hong Kong was trading in negative territory, and Singapore edged higher as European markets entered their pre-market phase. US equity futures indicated a mixed opening for the upcoming US session.
Japan’s Nikkei 225 (^N225) closed up 1.10% at 64,659.47, though it erased most of its intraday gains. South Korea’s KOSPI (^KS11) declined by 1.24% to 5,937.66, and mainland China’s Shanghai Composite (000001.SS) fell 0.98% to 3,645.26. Australian equities concluded their session higher, with the S&P/ASX 200 gaining between 0.4% and 0.46% according to sources.
In intraday trading, Hong Kong’s Hang Seng Index (^HSI) was down 0.26% at 23,035.73 as of approximately 3:00 pm Hong Kong time. Singapore’s Straits Times Index (^STI) was up 0.27% at 5,412.27 as of approximately 3:00 pm Singapore time.
Ahead of the US market open, Nasdaq-100 futures slid 1.4% to 1.5%, S&P 500 futures declined 0.5%, while Dow Futures rose 0.3%.
In commodity markets, gold edged lower, with Gold (GC=F) closing down 0.08% at $4,048.30. Oil prices eased, as Brent Crude (BZ=F) settled 4.36% lower at $110.29 per barrel and WTI Crude (CL=F) fell 1.32% to $101.42 per barrel.
The AUD/USD (AUDUSD=X) currency pair rose 0.26% to 0.7049, while USD/JPY (JPY=X) edged down 0.08% to 157.8710. The 10-year US Treasury yield (^TNX) rose 5.20 basis points to 5.045%.
What Drove Markets
Tech Earnings Deliver Mixed Signals
The latest round of US hyperscaler earnings sent mixed signals across global markets. While Microsoft reported robust results, including 48% growth in its cloud business, Alphabet’s performance disappointed investors. Google parent Alphabet (GOOGL) saw its shares slump approximately 9-10% in after-hours trading, with its third-quarter sales of $US111.2 billion falling short of expectations and the company posting negative free cash flow of $9.07 billion. This divergence influenced US equity futures and sent ripples through Asian tech, notably causing Samsung Electronics (005930.KS) shares to drop 4.13% on Thursday, as the company missed semiconductor profit expectations despite record third-quarter earnings. In contrast, SK Hynix (000660.KS) shares rose 2.62% after reporting stronger-than-expected profit and announcing a 100 trillion won ($75 billion) shareholder-return plan.
Central Bank Patience Amidst Tightening Bias
The US Federal Reserve voted 10-2 to hold its benchmark federal funds rate in a range of 3.75 per cent to 4 per cent, a decision widely anticipated by markets. However, the Federal Open Market Committee (FOMC) explicitly noted that inflation “remains elevated,” stating it was awaiting the “accumulation of more information” before taking further steps. Daniel Siluk, head of global short duration and liquidity at Janus Henderson Investors, interpreted the Fed’s decision as “mildly dovish at the margin” and “an expression of patience rather than a shift away from a tightening bias,” while also noting that “the door remains open to further tightening.” This stance has kept traders pricing in a roughly 78% chance of a US rate increase in December, according to CME FedWatch, making upcoming US inflation data highly influential.
Australian Consumers Tighten Belts
Despite overall gains in the Australian market, a notable sell-off in consumer discretionary and consumer staples stocks signaled increasing caution among Australian consumers. Major retailers Wesfarmers (WES.AX) and Woolworths (WOW.AX) saw their shares decline by 4.04% and 3.28% respectively, following reports of slowing sales. Datt Capital chief investment officer, Emanuel Datt, stated that Australian consumers are “clearly tightening their belts” amidst rising costs of living, higher interest rates, and unemployment.
Stocks to Watch
- Alphabet (GOOGL): Shares slumped in after-hours trading after the Google parent company reported third-quarter sales that fell short of expectations and posted negative free cash flow. Alphabet kept its full-year capital expenditures forecast at $195 billion to $205 billion.
- Microsoft (MSFT): Shares climbed in after-hours trading following robust results, including 48% growth in its cloud business, providing a positive counterpoint to Alphabet’s performance.
- Samsung Electronics (005930.KS): The South Korean tech giant’s shares dropped on Thursday as investors focused on a miss in semiconductor profit expectations, despite record third-quarter earnings. The company warned that AI-driven memory demand would outstrip industry supply in 2027.
- SK Hynix (000660.KS): Shares rose after reporting stronger-than-expected profit and announcing a significant 100 trillion won shareholder-return plan.
- National Australia Bank (NAB.AX): The Australian banking stock rose 2.33% to 41.36, leading a rally in banks that contributed to the S&P/ASX 200’s overall gains.
- Wesfarmers (WES.AX): Shares were down 4.04% to 74.02, impacted by declining Bunnings sales and broader signs of consumer belt-tightening in Australia.
- Woolworths (WOW.AX): The supermarket giant shed 3.28% to 39.48, reflecting slowing sales in the consumer staples sector.
- Woodside (WDS.AX): The energy stock rose 1.90% to 32.74, despite an easing oil price environment.