Asia stocks slide as US chip rout spreads; gold slips below $4,000

Key points

• Most Asian markets declined on Friday following the US chip sell-off that began Thursday: South Korea's KOSDAQ fell 3.5%, the Kospi lost 2.2%, the Nikkei 225 slipped 1.4%, and the Shanghai Composite shed 1.3%; Hong Kong's Hang Seng edged up 0.25%.
• Gold dropped below $4,000 an ounce for the first time since July but did not fall further.
• Oil remained within a tight range near recent highs, after Brent crude closed at its strongest level since May on Thursday.
• Major currencies were confined to narrow bands, with the yen inching up after Japan's inflation data.
• Japan's core CPI rose 2.1% in September, moving back above the Bank of Japan's target, while the gauge stripping out fresh food and fuel topped forecasts at 2.4%. The flash PMI for Japan held at 52.3.
• Australia's flash composite PMI slipped into contraction territory for the first time in five months.
• In corporate news, OpenAI is reportedly near a $30 billion funding round, SK hynix has ended consideration of a US IPO for Solidigm, and Western Digital delivered a sharp rise in revenue.

Equities

Stocks across Asia traded mostly lower on Friday, as the sell-off in US semiconductor names carried into the region. South Korea, which gives heavy weight to chipmakers in its indexes, led the decline: the technology-heavy KOSDAQ lost 3.5% and the main Kospi fell 2.2%. Japan's Nikkei 225 dropped 1.4%, while the Shanghai Composite in China slipped 1.3%. Hong Kong's Hang Seng was the outlier, up 0.25%.

The drop followed a rough Thursday on Wall Street, where the Philadelphia semiconductor index tumbled 6.7%, its biggest daily fall since June. The Nasdaq was down more than 2.5% after earnings from major technology firms, including Meta's spending plans, reignited worries about returns on AI investment.

Oil

Oil prices moved within a narrow range during Asian hours, staying close to recent peaks. Brent crude settled around $113 a barrel on Thursday, its highest level since early May, after reports that Washington and Israel had prepared plans for renewed strikes on Iran following next month's US midterm elections.

Fuel supply concerns also remained prominent. Donald Trump used the Defense Production Act to support domestic oil output and refining, with high fuel prices weighing on voters before the November 3 elections. In a separate report, Bloomberg said Rosneft is purposefully delaying fixes at refineries that have been struck time and again by Ukrainian drones, a situation that may hold back Russian fuel exports.

Gold

Gold slipped under $4,000 an ounce for the first time since July but did not extend losses in Asian trading. No fresh catalyst was behind the move. Elevated bond yields, a firm dollar and anticipated Fed tightening stemming from costly oil have all weighed on gold. The metal is roughly 25% beneath its January peak of more than $5,400. Central-bank purchases and demand for diversification still provide longer-term support.

FX

The main currency pairs stayed within their ranges. The yen ticked up once Japan's inflation figures came out, and USD/JPY slipped to around 156.25 before bouncing back to 157.00.

Japan

In September, Japan's core consumer prices were 2.1% higher than a year earlier, in line with expectations and up from August's 1.7% pace. The result put the measure above the BoJ's 2% objective for the first time in nine months. A narrower reading that strips out fresh food and fuel — a metric the BoJ follows closely — advanced 2.4%, beating the 2.3% projection. Price growth for both goods and services picked up even though the government subsidises fuel.

Markets widely expect the BoJ to leave its policy rate at 1.25% when the October 30 meeting concludes, while an upward revision of inflation projections is possible. A raise to 1.50% in December is anticipated by many analysts. Economy Minister Minoru Kiuchi said the government's conditions for formally ending deflation have not yet been fulfilled.

Japan's flash composite PMI held at 52.3 in October. The services sector firmed up, while factories produced at their weakest pace in seven months. Hiring slowed to a 14-month low, and the pace of input-cost inflation ticked up.

Australia

Australia's flash composite PMI came in at 47.7 in October, down from 51.3 a month earlier and pointing to the first contraction in private-sector output in five months. Service-sector output shrank for the first time since May, with businesses mentioning softer sentiment, higher borrowing costs and inflationary pressures. The rise in input costs was the quickest since May, and firms kept passing increases along to customers.

Company news

According to reports, OpenAI is nearing finalisation of a capital raise of up to $30 billion at a pre-money valuation of $1.25 trillion, with United Arab Emirates investors fronting the round. The figure is less than the approximately $1.4 trillion OpenAI was reported to have pursued earlier in the month.

SK hynix says Solidigm has wrapped up its examination of a US listing, with market conditions and share-price movements given as reasons. A US listing had been weighed partly to finance a new factory in the country. In early Seoul trade, SK hynix stock dropped by as much as 4.2% before moving between gains and losses.

Western Digital said fiscal first-quarter revenue rose about 55% to $4.38 billion, lifted by AI-driven storage demand and stronger pricing, and it put its current-quarter guidance above analyst estimates. Even so, the stock moved lower in after-hours trading as AI-related shares were sold off across the board.