FISG Daily Market Wrap 3rd November

Semiconductor Selloff, Gulf Diplomacy and Rising Energy Risks

Asian equities came under pressure as the selloff in US semiconductor stocks deepened and investors adopted a cautious stance ahead of the US midterm elections. The MSCI Asia Pacific Index fell 1.2%, led by South Korea’s Kospi, which dropped almost 4%. Samsung Electronics and SK Hynix both lost more than 4%, while Taiwan’s benchmark declined 3.6%. The pressure followed another difficult session for US technology shares. A semiconductor index extended its losing streak to three sessions, bringing its cumulative decline to 12%. The Nasdaq 100 also moved further into correction territory, falling around 10% from its peak. Concerns over AI valuations and the sustainability of technology-sector growth continue to weigh on investor sentiment. Palantir added to the uncertainty after its latest quarterly outlook pointed to a potential slowdown in sales growth. Chinese markets also weakened despite further efforts by authorities to support equities. The People's Bank of China encouraged financial institutions to make greater use of stock-support tools, while simultaneously taking steps to slow the yuan's appreciation. The currency fell as much as 0.4% against the dollar, ending a 13-session winning streak — its longest since 1996. In monetary policy, the Reserve Bank of Australia raised its key interest rate to an 18-year high in a split decision, extending its tightening cycle as policymakers continue to struggle with inflation. Oil markets remained focused on developments in the Middle East. Brent crude stabilised after plunging almost 8% in the previous session, as Washington and Tehran signalled a willingness to continue peace negotiations. Iranian officials said both sides are reviewing the latest proposals from mediators, with diplomatic efforts continuing to narrow differences. President Masoud Pezeshkian also indicated that his government has received greater authority to pursue negotiations. However, energy supply risks remain substantial. Saudi Aramco's CEO warned that tanker attacks have eliminated around 15% of effective capacity, highlighting the impact of disruptions to regional shipping. The Persian Gulf remains central to global energy security, and any further attacks on tankers or infrastructure could threaten supply and reverse the recent decline in oil prices.Elsewhere, reports indicate that the US, Russia and China are considering a trilateral meeting between their leaders, potentially adding another dimension to an already complex geopolitical environment. Markets are facing pressure from two major fronts: the correction in technology shares and continuing uncertainty over Middle East energy supplies. While diplomatic progress between Washington and Tehran has helped ease oil prices, the scale of the disruption to tanker capacity underlines how fragile the situation remains. Investors will also be watching the US midterm elections and central bank decisions for further direction. 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