Asian stocks slide ahead of US midterms as oil steadies

what happened

Asian stock markets fell on Tuesday amid worries about AI spending and the earnings outlook for technology companies, Reuters reports. The broad MSCI Asia-Pacific index excluding Japan lost 1.4% and dropped to its lowest level since October 23, while South Korean shares at one point fell as much as 4.1%. Taiwan's TAIEX slid 3.3% and is on track for a technical correction, down 13.1% from its early-October record.

Brent crude held near $105.30 a barrel after a drop of more than 7% on Monday, as investors weighed talks between the US and Iran. The dollar rose 0.4% against the yuan after the People's Bank of China said it would lift the foreign exchange deposit reserve ratio to 6% from 4%, effective November 15.

Attention is now on the US Congressional midterms. Opinion polls favour the Democrats to win the House, while the Senate remains too close to call. Prediction markets put the Democrats' chances of controlling the Senate at roughly 76% to 77%. The yield on the 10-year Treasury note rose to 4.913%.

why it matters

Two forces matter for markets now: doubts about how long the tech cycle in Asia can last, and a possible shift in US policy after the vote. Standard Chartered's Steve Englander said a decisive Republican sweep would likely lift yields and the dollar. Bitcoin barely moved, trading near $76,822, as customers pulled a net $4.72 billion from Binance after last week's hack.

market impact

Asian equities and tech: pressure from AI spending doubts; the dollar and Treasury yields await the US midterm outcome

• ▼South Korean and Taiwanese shares pressure down — equity outflows on doubts about the sustainability of the tech cycle
• ▲US dollar pressure up — a possible Republican sweep in the midterms and the PBOC reserve ratio move

tags

instruments