San Francisco Frontiers - Asian equities diverge after mixed technology earnings and Fed rate decision

HONG KONG: Asian tech stocks diverged on Thursday as mixed results from some of the artificial intelligence sector’s biggest companies tempered recent optimism, against a backdrop of growing anxiety about corporate investment and debt.

Markets had rallied over the previous two days on strong results from South Korean chipmaker SK hynix and a much-watched IPO filing from AI firm Anthropic, easing investors’ doubts about the vast sums being spent on AI and when they will pay off. But uncertainty returned after Samsung Electronics’ third-quarter operating profit of 107.4 trillion won ($80.5 billion) fell short of estimates, despite a 783 percent year-on-year jump. Samsung said it was the first time any tech company had posted quarterly operating profit of over 100 trillion won.

Alphabet reported lower-than-expected profit and a slowdown in its advertising business, sending its shares down 10 percent in after-hours trading, while Samsung lost over 5 percent in Seoul. Microsoft posted forecast-beating revenue and profit, driven by its Azure cloud division, and Oracle issued a strong revenue forecast.

Moody’s Ratings warned that high interest rates could cause problems for borrowers. “With interest rates much higher in many global regions than they were in 2021, refinancing risk will become more visible as loans originated in 2020-22 approach maturity,” it said in its latest Private Credit Quarterly.

SK hynix rose over 1 percent, and Japan’s Kioxia and Advantest also gained, but Tokyo Electron, SoftBank and TSMC fell. Tokyo, Sydney, Singapore, Wellington and Manila rose, while Seoul sank nearly 3 percent and Hong Kong, Shanghai, Taipei and Jakarta also fell.

There was little reaction to the Federal Reserve’s widely expected decision to hold interest rates. Two members voted for an immediate hike. Fed Chair Kevin Warsh said policymakers needed more information to “determine the policy stance appropriate to ensure a timely return of inflation to the two-percent goal”. Inflation has been above target for five years.

Oil prices dipped after Wednesday’s rally but remained above $100 against a backdrop of reports that the United States is planning a new military attack on Iran after the midterm elections. Investors are also watching efforts to form a new government in Israel after Prime Minister Benjamin Netanyahu and the opposition were tied in this week’s election.

Key figures at around 0230 GMT:

Tokyo - Nikkei 225: UP 0.3 percent at 64,131.28 (break)

Seoul - Kospi: DOWN 2.9 percent at 5,837.65

Hong Kong -Hang Seng Index: DOWN 0.1 percent at 23,079.25

Shanghai - Composite: DOWN 0.8 percent at 3,653.99

West Texas Intermediate: DOWN 1.2 percent at $101.57 per barrel

Brent North Sea crude: DOWN 0.9 percent at $114.32 per barrel

Euro/dollar: UP at $1.1156 from $1.1154 on Wednesday

Pound/dollar: UP at $1.3332 from $1.3320

Dollar/yen: DOWN at 157.64 yen from 158.03 yen

Euro/pound: DOWN at 83.68 pence from 83.71 pence

Dow: UP 0.2 percent at 52,475.10 (close)

FTSE 100: UP 0.1 percent at 10,694.50 (close) — AFP

H.Davis--SFF