Asian Stocks Slide as Oil Prices and Yields Weigh on Risk Appetite
Asian stocks fell broadly on Thursday as surging oil prices and elevated U.S. Treasury yields pressured risk appetite, according to Investing.com. South Korea’s KOSPI index slid nearly 2%, dragged lower by Samsung Electronics, which reported its strongest quarterly profit forecast on record but missed analyst expectations.
Samsung’s Record Profit Forecast Misses Expectations
Samsung Electronics projected third-quarter operating profit of 107.4 trillion won ($80.2 billion), a 782.5% increase from a year earlier, making it the first technology company to forecast quarterly profit above 100 trillion won. However, the figure fell short of Bloomberg’s estimate of 108.67 trillion won. The company attributed the surge to strong demand for memory chips used in artificial intelligence applications. Investors, however, remained focused on whether the semiconductor boom can sustain its momentum, as Samsung’s shares had already risen sharply earlier in the year.
Oil Prices Rise on Geopolitical Tensions
Crude oil prices climbed nearly 3% to above $102 a barrel, driven by concerns over Middle East supply disruptions, including tensions around the Strait of Hormuz. An Axios report revealed the U.S. Pentagon has directed the military to prepare for potential combat operations in Iran, further heightening regional anxieties.
U.S. Treasury Yields Remain Near Multi-Decade Highs
U.S. Treasury yields stayed near multi-decade highs after the benchmark briefly hit 5.36% on Wednesday, its highest level since 2002. A strong Treasury auction later pulled yields back slightly, but the sustained increase has raised the opportunity cost of holding equities, disproportionately affecting technology stocks.
Regional Markets Suffer Broader Declines
Singapore’s market tumbled 3.6%, hitting its lowest since mid-July, while Japan’s market fell 1%. Mainland Chinese markets, resuming trading after the National Day Golden Week holiday, declined as well, with China’s market down 1%. Hong Kong’s market dropped 1.1%, and Australia’s market fell 0.8%.
Investors Eye Fed’s Policy Outlook
Minutes from the Federal Reserve’s latest meeting indicated most policymakers viewed a rate hike as likely by year-end, though officials emphasized a data-dependent approach. Markets priced in only a 19% chance of an October increase but an 80% probability of a December hike, reflecting uncertainty about the central bank’s next move.
Why Samsung Stock Fell and Oil Prices Rose?
Why did Samsung’s stock fall despite record profit forecasts?
Samsung’s shares declined despite a 782.5% year-over-year profit surge because the figure missed analyst expectations. Investors focused on the sustainability of the semiconductor boom rather than the immediate numbers.
What drove the rise in oil prices?
Oil prices climbed due to geopolitical tensions in the Middle East, including concerns over supply disruptions in the Strait of Hormuz and U.S. military preparations for potential conflict with Iran.
How are U.S. Treasury yields affecting global markets?
Rising Treasury yields have increased the opportunity cost of holding equities, particularly impacting technology stocks, which are sensitive to interest rate changes.
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