Stock Market Update

U.S. equity futures point to a sharply lower open, with the S&P 500 futures currently 74 points below fair value. 

Asian markets sold off sharply on Thursday, with renewed pressure on technology shares compounded by escalating Middle East tensions and a surge in oil prices. Japan's Nikkei 225 plunged 2.7% to its lowest close in nearly three months, with Tokyo Electron (-7%), SoftBank Group (-7%), Kioxia Holdings (-7%), Advantest (-6%), and Taiyo Yuden (-6%) leading the retreat as persistent questions surrounding returns on AI investment collided with a fresh energy shock. China's Shanghai Composite fell 1.5%, with the Shenzhen Component dropping 3.0% as Zhongji Innolight (-9%), Eoptolink Technology (-12%), and Foxconn Industrial Internet (-4%) joined the regional technology selloff. Hong Kong's Hang Seng sank 3.0% to its lowest level since July, pressured by Lenovo (-12%), Wuxi Biologics (-9%), Alibaba (-6%), SMIC (-6%), and Tencent (-3%). South Korea's KOSPI tumbled 3.5% to its lowest close since April, reversing Wednesday's rally as Samsung Electronics (-4%) and SK Hynix (-6%) renewed their declines even as semiconductor exports surged 222.5% yr/yr during the first 20 days of October, underscoring continued underlying chip demand. The Bank of Korea left its policy rate unchanged at 3.00%, as expected. Brent crude climbing above $110 following deadly attacks on a Saudi oil field added another layer of pressure across the region, raising concerns surrounding energy supplies and inflation, particularly for import-dependent economies such as Japan.

• In economic data:
  • South Korea's Bank of Korea left its policy rate unchanged at 3.00%, as expected.
  • South Korea's semiconductor exports surged 222.5% yr/yr during the first 20 days of October.
  • New Zealand's Q3 CPI increased 0.7% qtr/qtr (expected 0.8%; prior 1.5%) and 3.7% yr/yr (expected 3.8%; prior 4.1%).
  • Japan's foreign bond buying totaled -JPY161.6 bln (prior -JPY339.9 bln).
  • Foreign investment in Japanese stocks totaled -JPY66.5 bln (prior +JPY3,545.5 bln).
  • China's September FDI was down 4.3% (prior -5.3%).
  • Hong Kong's September CPI increased 0.3% m/m (prior 0.1%) and 1.9% yr/yr (expected 1.8%; prior 1.9%).
  • Hong Kong's unemployment rate increased to 3.9% from 3.8%.

European markets trade broadly lower as escalating Middle East tensions and oil prices above $110 compound renewed concerns surrounding AI investment and elevated borrowing costs. Germany's DAX falls 1.0%, with Infineon (-3%) and Siemens Energy (-3%) leading technology-related weakness, while SAP (+1%) bucks the decline after quarterly revenue topped EUR10 bln for the first time and the company raised its full-year revenue outlook. France's CAC 40 drops 1.3% as the country's 10-year government bond yield remains above 5% amid political and fiscal uncertainty ahead of Moody's sovereign-rating review on Friday, while Hermes (-7%), STMicroelectronics (-3%), and Kering (-3%) retreat. London's FTSE 100 declines 0.4%, with Barclays (-2%) falling after investment-banking revenue missed expectations and Sainsbury's (-3%) retreating despite better-than-expected first-half profit, while miners weaken alongside sharp declines in gold, silver, and copper prices. Rising oil prices following deadly attacks in Saudi Arabia add another inflationary concern for the region at a time when elevated rates are already increasing scrutiny of AI investment returns and government borrowing costs. The STOXX Europe 600 falls 0.9%, while Italy's FTSE MIB drops 1.7% and Spain's IBEX 35 loses 1.6%, underscoring the breadth of the risk-off move across the region.

• In economic data:
  • France's October Business Survey increased to 105 (expected 101; prior 101).
  • The U.K.'s October CBI Industrial Trends Orders fell to -32 (expected -20; prior -9).
  • The Swiss National Bank's September assessment showed policymakers left the policy rate unchanged at 0%, judged monetary policy appropriate, and retained a willingness to intervene in foreign exchange markets if necessary.
  • September car registrations rose 12.0% yr/yr in the U.K., 11.6% in France, 9.8% in Italy, and 9.0% in Germany.