FISG Daily Market Wrap 5th November

Asian Tech Selloff, Falling Oil Prices and Treasury Gains

Asian markets diverged as investors rotated away from regional semiconductor stocks following the US midterm elections. South Korea's Samsung Electronics and SK Hynix both fell more than 7%, dragging the Kospi down 5.2% amid concerns over tighter US data-centre regulations. In contrast, Chinese technology giants Tencent and Alibaba gained more than 6% each, lifting Hong Kong's Hang Seng Tech Index by 5%. US Nasdaq 100 futures declined 1.2%, signalling further pressure on semiconductor stocks. Consumer shares provided some support across the region, with Toyota, Alibaba and Sony among the leading contributors. Australia's benchmark rose 2.5%, while India's Nifty 50 gained 1.8%. Japan's Nikkei 225 fell 1.6%, despite a 1.3% advance in the broader Topix index. Oil extended its sharp decline, with Brent crude falling another 0.7% to $93.94 a barrel after losing more than 8% in the previous session. Investors are increasingly betting that the Democratic sweep of Congress could accelerate efforts to end the conflict with Iran, now in its ninth month, potentially easing concerns over energy supply disruptions. The Persian Gulf remains central to the global energy outlook, with any progress towards de-escalation likely to influence oil prices and inflation expectations. US Treasuries advanced for a second consecutive session as lower oil prices strengthened expectations of easing inflationary pressure. Yields declined across the curve, with the 10-year Treasury yield falling as much as five basis points to 4.84%, its lowest level since September 10. The dollar also weakened against nearly all Group-of-10 currencies. The US election result is also reshaping expectations for fiscal policy and government borrowing. The Treasury Department has revised its guidance on note and bond issuance, opening the possibility of larger short-term debt sales and reduced longer-term auctions. Wall Street strategists are now reassessing their borrowing forecasts for next year. Meanwhile, the Republican Party is facing internal divisions following its poor midterm performance, with criticism directed towards the White House and potential 2028 presidential candidates beginning to position themselves. In Australia, economists believe this week's interest-rate increase may mark the end of the developed world's most aggressive tightening cycle, although reports of disagreements within the Reserve Bank's policy board have raised questions about the decision. Markets are increasingly pricing in a combination of lower energy prices, changing US fiscal expectations and shifting technology-sector leadership. While Chinese technology shares have benefited from the rotation, pressure on Asian chipmakers highlights continuing concerns over regulation and AI-related valuations. Developments in the Persian Gulf remain essential to the outlook for oil, inflation and global risk sentiment. FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next. FISG — Interstellar Group