The key facts
- Asian and European exchanges fell after mixed reports from Meta and Tesla; Tesla lowered profit and cut its capex forecast, Meta raised its AI spending estimates
- SK hynix fell 5.5%, Samsung — 4%, Kioxia and Tokyo Electron — up to 7%; Kospi dropped more than 3%, Nikkei 225 — 2.7%
- Oil rose more than 3% after Houthi attacks on a Saudi Aramco field and an airport in Dammam; the US is evacuating part of its embassy staff
Tech stocks drag markets down
Asian stock markets fell sharply on Thursday amid a renewed decline in technology companies following mixed earnings reports from American corporations. Another negative factor was another surge in oil prices. Companies linked to artificial intelligence have continued to experience sharp swings since hitting record highs in June: investors are worried about the enormous volumes of investment and the timelines for reaching profitability, while rising debt servicing costs add to the uncertainty.
Meta and Tesla earnings disappointed investors
On Tuesday Elon Musk's SpaceX presented its first quarterly report since its June listing, which the market received positively and which helped all three major Wall Street indexes rise. However, after-hours releases from Meta and Tesla once again mixed things up for investors. Tesla reported a decline in profit for July–September and cut its capital expenditure forecast for the current year, while Facebook's parent company Meta raised its estimates for artificial intelligence spending. Analysts note that markets are nervous both when companies increase spending and when they cut it. 'Meta's numbers reinforce the AI investment cycle, but funding is becoming an increasingly important topic,' said Chris Weston of Pepperstone. According to him, investors reward growth and monetisation, but are increasingly sensitive to how the next stage of investment is financed and what that means for existing shareholders. Uncertainty was added by disappointing results from Netflix earlier in the week and a weak profit forecast from semiconductor equipment maker Lam Research. Next week, reports will be presented by Microsoft, Amazon and Alphabet, and in November — Apple and Nvidia.
Decline in Asia and Europe
Asian technology companies went into the red, dragging broader markets down with them. South Korean chipmakers SK hynix and Samsung lost 5.5% and 4% respectively, while Japan's Kioxia and Tokyo Electron fell by up to 7%. The Kospi index in Seoul dropped more than 3%, Tokyo's Nikkei 225 fell 2.7% to 63,907.84. Hong Kong's Hang Seng slipped 3% to 22,934.68: NetEase and Tencent suffered, while Alibaba and JD.com were additionally pressured by authorities' demand to tighten quality standards. Shanghai (−1.5% to 3,658.03), Sydney, Singapore, Taipei, Mumbai, Wellington and Manila also ended deep in the red. London's FTSE 100 fell 0.6% to 10,687.74; Paris and Frankfurt also declined.
Attacks in Saudi Arabia lifted oil prices
Investor sentiment was worsened by oil prices rising more than 3% after deadly attacks in Saudi Arabia that raised concerns about supplies. Yemen's Houthis struck a Saudi Aramco field and King Fahd International Airport in Dammam. The US ordered embassy staff and their family members to leave the country amid ongoing Houthi attacks. West Texas Intermediate rose 2.8% to $99.88 per barrel, Brent — 3.2% to $112.27.
