Asian stocks fell on Thursday as significant losses from Chinese tech giants pressured markets, leading to a downturn across the region. The Hang Seng Index in Hong Kong was particularly impacted, reflecting broader concerns over technology firms' performance following a mixed earnings season from major U.S. companies.
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Tech stocks have experienced volatility, particularly AI-linked companies that have struggled since reaching record highs in June. Investors are increasingly worried about heavy investment costs and unclear timelines for profitability, compounded by rising debt-servicing expenses.
Wall Street saw a brief uplift after SpaceX reported strong quarterly earnings, its first since going public in June, which initially buoyed market confidence. However, after-hours financial results from Meta and Tesla created uncertainties among traders. Tesla reported lower profits for the July-September quarter and reduced its capital expenditure forecast. Concurrently, Meta increased its spending estimates on artificial intelligence, further complicating the investment landscape.
Chris Weston from Pepperstone noted that while Meta's performance highlights the ongoing AI investment cycle, the mounting importance of funding discussions is becoming increasingly critical to investors. This follows disappointing earnings from Netflix and a weaker-than-expected forecast from semiconductor equipment manufacturer Lam Research, raising further alarm among investors.
Looking ahead, major tech companies including Microsoft, Amazon, and Alphabet are set to report earnings next week, while Apple and Nvidia are scheduled for November.
In the meantime, Asian tech stocks struggled, with South Korean chipmakers SK Hynix and Samsung each losing around three percent. The Kospi index in Seoul decreased by about two percent, and Tokyo’s Nikkei 225 dropped nearly one percent. Firms in Hong Kong, including Alibaba, JD.com, and Tencent, also faced significant declines. Markets in Shanghai, Sydney, Singapore, Taipei, Wellington, Manila, and Jakarta were similarly affected.
Investor sentiment was additionally dampened by a more than one percent rise in oil prices following attacks in Saudi Arabia, which raised concerns over supply disruptions. The Houthis in Yemen targeted a Saudi Aramco field and King Fahd International Airport, further contributing to market unease.