FX.co ★ Asian Shares Retreat Despite Positive China Data

Asian markets mostly closed lower on Friday, despite a modest rise in Hong Kong following encouraging data on Chinese manufacturing and real estate activity. Elsewhere in Asia, a pervasive caution lingered, influenced by mixed U.S. tech company earnings, ongoing tensions in the Middle East, and uncertainties surrounding next week's U.S. presidential election.

Apple's sales in China fell short of expectations, contrasting with strong guidance from both Amazon and Intel. Market attention was also turning towards upcoming U.S. employment figures, anticipated to provide further insight into the Federal Reserve's interest rate path.

The U.S. dollar remained stable against key currencies, while gold rebounded slightly and aimed for a minor weekly gain after a decline from recent highs. Oil prices rose further after Israeli intelligence indicated a potential Iranian assault on Israel from Iraq in the coming days.

China's Shanghai Composite Index experienced fluctuations before closing lower by 0.24 percent, settling at 3,272.01, as the country prepared for a significant legislative gathering from November 4-8. In contrast, Hong Kong's Hang Seng Index climbed by 0.93 percent to 20,506.43, driven by a private survey revealing a rebound in manufacturing activity among smaller Chinese manufacturers in October. Additionally, new home sales by China’s largest developers increased year-on-year for the first time this year, following the implementation of robust government measures.

Japanese stocks took a hit after the yen surged nearly 1 percent against the dollar on Thursday. Comments from Bank of Japan Governor Kazuo Ueda suggested that currency fluctuations have heavily influenced the economy, hinting at potential rate increases. Investors also reacted to data indicating a three-month peak decline in Japan's factory activity in October. The Nikkei average fell 2.63 percent to 38,053.67, while the broader Topix index decreased 1.90 percent to 2,644.26. Chip equipment manufacturer Lasertec dropped 16.4 percent following an earnings miss, with other tech firms like Advantest and Tokyo Electron declining by 4.4 percent and 3.9 percent, respectively. Meanwhile, SoftBank Group shares slumped 5.6 percent.

In Seoul, the stock market saw a decline for the third consecutive session, particularly in the tech sector. The Kospi index dipped 0.54 percent to 2,542.36, with Samsung Electronics and SK Hynix losing 1.5 percent and 2.2 percent, respectively.

Australian markets also marked a third successive day of losses, driven by concerning earnings forecasts from Microsoft and Meta. The S&P/ASX 200 index fell by 0.5 percent to 8,118.80, hitting a seven-week low, while the broader All Ordinaries index similarly declined by 0.5 percent, closing at 8,379.70. Financial stocks were severely impacted, notably Macquarie Group, whose profits missed analyst expectations, causing its shares to drop 3.6 percent. Across the Pacific, New Zealand's S&P/NZX-50 index concluded the day 0.63 percent lower at 12,559.28.

In the U.S., stock markets suffered overnight as Meta Platforms and Microsoft cautioned about escalating artificial intelligence costs. Economically, consumer spending outpaced forecasts in September, unemployment claims reached a five-month low, and labor costs saw their smallest rise in over three years due to moderating wage growth. The PCE index, considered the Fed’s favored inflation metric, showed a slight decline in headline inflation to 2.1 percent year-on-year in September. Meanwhile, core PCE inflation remained steady at 2.7 percent, against an expected 2.6 percent, fueling concerns about the Fed potentially delaying rate cuts. The tech-heavy Nasdaq Composite dropped 2.8 percent, the S&P 500 fell 1.9 percent, and the Dow decreased by 0.9 percent.