(Oct 13) : Asian stocks were set to decline as a selloff in chipmakers weighed on sentiment ahead of a pivotal earnings season and US inflation data that could shape the Federal Reserve’s next move.
Equity-index futures for Japan, Hong Kong and South Korea pointed lower, while those for Australia edged higher. US stock contracts were little changed after a gauge of chipmakers fell 2.7% and the Nasdaq 100 lost 0.7%. Treasury futures fluctuated ahead of the resumption of cash trading following a US holiday. A Bloomberg gauge of dollar strength climbed to its highest since mid-May 2025.
Micron Technology Inc. fell 3.9% and US-listed shares of SK Hynix Inc. dropped 4% after Chinese rival CXMT said it made progress on a memory-chip design capable of storing more data. Sandisk Corp. slid 6%, among the S&P 500’s biggest decliners.
Enthusiasm for artificial intelligence eased as investors weighed the outlook for capital spending against rising borrowing costs. Wall Street’s equity bull entered its fifth year, with the S&P 500 up nearly 120% from its 2022 low, putting the onus on earnings growth to justify elevated valuations.
“Growth has been powerful enough to keep valuations in check and allow investors to look past higher yields, interest rates and inflation,” said Bret Kenwell at eToro. “Another strong quarter could reinforce the bull narrative intact into year-end, while a disappointment could catalyze a broader pullback.”
US oil edged lower in early trading after Brent advanced 1.8% Monday as Ukraine cast doubt on an “energy ceasefire” touted by US President Donald Trump and Saudi Arabia faced fresh Houthi attacks following the deadliest strikes since the start of the Iran war.
“We now expect Brent crude to average above US$100 a barrel through the second quarter of next year following attacks on Red Sea export infrastructure and a more persistent geopolitical risk premium,” Stephen Hare, lead economist at Oxford Economics, wrote in a note. “Prices decline thereafter as supply normalizes, but the return towards long-run equilibrium is now slower than previously expected.
The earnings season in the US gets underway Tuesday, with Goldman Sachs, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. due to report. Bank of America Corp. and Morgan Stanley follow Wednesday. S&P 500 companies are estimated to post a 25% increase in third-quarter profits from a year earlier, according to data compiled by Bloomberg Intelligence.
Investors will also be focusing on Wednesday’s consumer price index, likely the most important economic report the Fed will see before its October meeting.
Federal Reserve Bank of Cleveland President Beth Hammack said smaller, more frequent policy adjustments can help keep inflation expectations anchored, though she stopped short of backing another rate increase this month.
“This week’s CPI report is likely to be the most important release of data the Fed will see before its October meeting,” Jason Pride, chief of investment strategy and research at Glenmede, wrote. “Barring a stronger than expected inflation reading, the Fed is likely to take a patient approach to its next rate hike.”
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