Oct 16,V7N- Asian equities fell on Wednesday, influenced by disappointing earnings from Europe's largest tech company, ASML, which negatively impacted chip stocks globally. This downturn was compounded by lackluster earnings from French luxury giant LVMH, which showed weakening demand for luxury goods in China, despite the country's recent stimulus measures.

South Korean stocks dropped by 0.6%, while chip stocks led Japan’s Nikkei down by 1.8%, and Taiwan’s stocks fell 1.2%. The broader MSCI Asia-Pacific index, excluding Japan, was down 0.32%. Analysts like Matt Simpson from City Index pointed to increased caution among investors, with the looming U.S. election on November 5 contributing to market jitters.

ASML’s forecast of lower-than-expected 2025 sales reflected caution across the semiconductor market, despite a boom in AI-related chips. The weakness outside the AI sector was noted by Nick Ferres, CIO at Vantage Point Asset Management. Additionally, reports that U.S. officials may cap AI chip export licenses further dampened sentiment.

Chinese stocks, including the CSI300 and Hang Seng Index, also dipped as investors awaited further stimulus details, particularly concerning the property sector. HSBC strategist Steven Sun suggested that recent policy announcements signal a long-term shift in China's economic strategy.

On the macroeconomic side, expectations surrounding U.S. Federal Reserve rate cuts supported the U.S. dollar, with traders pricing in a 96% chance of a 25-basis-point cut next month. The U.S. dollar index hovered near its highest level since August, while the euro remained low ahead of the European Central Bank's policy meeting.

In commodities, oil prices remained steady after previous declines, with Brent crude rising 0.4% to $74.56 per barrel and U.S. West Texas Intermediate crude up 0.5% to $70.93 per barrel, as investors watched developments in the Middle East for potential supply impacts.

END/BUS/RH/