Asian markets declined amid risk-off sentiment ahead of the U.S. elections, with tech stocks facing valuation concerns, particularly in South Korea and Japan, while energy sectors benefit from AI-driven demand. Political developments, including key U.S. gubernatorial and mayoral races, alongside mixed corporate performances and a busy IPO scene in Hong Kong, underscore the complex factors influencing the Asia-Pacific financial landscape.
The Asia Trade segment opens with a focus on the risk-off sentiment shaping the Asian markets ahead of the U.S. elections, where voters are casting ballots in over 30 states for various positions including governors and mayors. Asian markets followed Wall Street’s overnight sell-off, led by technology stocks, with Japanese stocks falling for the first time in five sessions. The Bank of Japan’s recent policy meeting kept rates steady but revealed some dissenters calling for a hike, while the Japanese yen faced pressure despite support from the finance minister. South Korea’s KOSPI index also dropped sharply after the Korean Exchange issued a caution on SK Hynix, which had rallied 240% this year on AI optimism, signaling concerns over stretched valuations.
Australian assets showed weakness amid risk-off flows, with bonds tracking U.S. Treasuries and the New Zealand dollar hitting a 12-year high despite weak jobs data. The Bloomberg Dollar Index surged to its highest since May as investors moved away from stocks and recalibrated expectations around Federal Reserve policy. On Wall Street, tech stocks like Palantir, Nvidia, AMD, and Supermicro faced bearish bets after disappointing forecasts, while Bitcoin hovered just above $100,000 following a liquidation event in October. Market pessimism was echoed by U.S. CEOs, including Morgan Stanley’s David Solomon, who described pullbacks as normal market cycles amid stretched valuations in high-flying tech stocks.
The U.S. elections are also a major focus, particularly the New York mayoral race where progressive candidate Zohran Mamdani, a self-described Democratic socialist, leads the polls against former governor Andrew Cuomo and Curtis Sliwa. This race is seen as a referendum on the future direction of the Democratic Party. Meanwhile, key gubernatorial races in Virginia and New Jersey are closely watched, with Democrats and Republicans battling tight contests that could influence the political landscape and the ongoing government shutdown. Lawmakers see the election night as a potential turning point that might prompt an end to the longest government shutdown in U.S. history.
In Asia, valuation concerns are weighing heavily on tech stocks, especially in South Korea, where the KOSPI has seen a nearly 70% gain this year. Analysts note that while Asian tech valuations remain lower than U.S. counterparts, the bar for earnings performance is rising. The AI thematic rally is maturing, shifting from idea generation to operational monetization, benefiting sectors like energy, particularly nuclear and renewables, which support the growing electricity demand from AI infrastructure. South Korea is viewed as a high-conviction market due to its strategic role in AI chip production and defense, while China’s rally has stalled as investors await more substantial policy stimulus.
Japanese markets are also under pressure, with SoftBank and other tech stocks falling sharply despite SoftBank’s massive $30 billion investment in OpenAI. However, Nintendo stands out with a more than 10% surge after raising its sales and operating income forecasts, driven by strong demand for its Switch 2 console heading into the holiday season. Meanwhile, Japanese automakers face challenges amid a mixed sales environment in the U.S. and China, with Nissan warning of losses and Honda’s motorcycle business offsetting car sales declines. The segment also highlights a busy IPO market in Hong Kong, with a luxury vehicle maker backed by Huawei raising $1.8 billion, reflecting ongoing investor interest despite competition concerns in China’s EV sector. Overall, the video captures a complex interplay of market volatility, political developments, and sector-specific dynamics shaping the Asia-Pacific financial landscape.