Global risk assets retreated sharply on Tuesday as an accelerating liquidation across semiconductor names pushed the Nasdaq 100 into official technical correction territory, down 10% from its record highs. The rout triggered severe regional spillovers across Asia-Pacific bourses, pulling the MSCI Asia Pacific Index down 1.2%. With Tokyo closed for Culture Day, selling concentrated aggressively in memory and foundry bellwethers: South Korea’s Kospi plunged nearly 4.0%—dragged lower by >4% drops in Samsung Electronics and SK Hynix—while Taiwan’s Taiex dropped 3.6%.

The third consecutive decline in the Philadelphia Semiconductor Index (-12% over three sessions) underscores a structural shift from thematic AI optimism to aggressive cash-flow scrutiny. Markets are actively repricing capital-expenditure returns, scrutinizing whether hyperscalers can sustain record infrastructure outlays following recent mixed earnings, and testing hardware suppliers' pricing power against high hurdle rates and elevated real yields.

In Greater China, equity benchmarks stumbled despite the People's Bank of China optimizing terms on institutional stock-stabilization tools. Market skepticism over domestic consumption, structural property drags, and private-sector confidence overshadowed Beijing's liquidity facilities. Concurrently, the PBOC halted the onshore Yuan’s 13-day winning streak—its longest since 1996—by hiking foreign-currency reserve requirements for financial institutions, guiding the Yuan down 0.4% to 6.6728 per Dollar to shield exporters from uncoordinated currency appreciation.

Monetary policy decisions highlighted central banks' tightening dilemmas. The Reserve Bank of Australia raised its cash rate by 25 bps to a pre-GFC peak of 4.85%. However, a 6-3 split vote signaled growing Board friction over domestic mortgage strain. While Governor Michele Bullock noted that unanchored inflation expectations and domestic capacity constraints will keep CPI above the 2-3% target until late 2027—interestingly citing AI-related infrastructure demand as a real-economy investment buffer—her acknowledgement of monetary transmission lags suggests the terminal policy rate has likely been achieved.

In Europe and the UK, central banks are balancing persistent price pressures against tightening financial conditions. The Bank of England remains on track for a 25 bps hike to 4.0% on Thursday, supported by the October DMP survey displaying ~4% inflation expectations, though cooling domestic hiring will likely ensure a cautious forward vote split. Long-end UK gilts extended their post-Budget relief rally—with 30-year yields compressing 40 bps from October peaks to 5.63%—aided by benign DMO remit additions. However, fiscal analysts caution that severe medium-term spending constraints across non-protected departments defer rather than eliminate sovereign fiscal risks ahead of the next Spending Review.

All eyes in Washington turn to today’s US midterm elections, where prospective Democratic legislative gains inject regulatory uncertainty around AI oversight and next year's debt-ceiling mechanics. On the data tape, today's JOLTS job openings open a heavy employment slate that includes ADP, ISM surveys, and Friday's non-farm payrolls.

Macro to Micro: The macro landscape is absorbing a severe repricing as the AI growth engine downshifts into a valuation correction. While the RBA delivered a hawkish hike, its internal dissent mirrors a broader G10 theme: central bankers are nearing terminal policy rates just as equity drawdowns and high borrowing costs tighten financial conditions on their behalf. For traders, immediate tactical focus centers on semiconductor support levels, US midterm exit polls, JOLTS labor turnover, post-hike AUD rate curves, and Brent crude price stability near $110/bbl..

Overnight Headlines

US Strikes Iran’s Qeshm Island, Trump Plays Down War Risk
Trump Says No Rush To Decide On Resuming Iran War
VP Vance Expresses Optimism Over Negotiated Settlement With Iran
Iran-US Talks End Without Breakthrough, Contacts To Continue
US To Mediate Trilateral Talks With RUS, UKR In Abu Dhabi Next Week
US Plans Fresh NATO Push To Increase Arms Deliveries To Ukraine
US Tsy Cuts Q4 Borrowing Est. To $618B, Projects $800B For Q1 27
RBA Raises Cash Rate By 25bps To 4.85%, Highest Since 2008
China Talks Up Market Openness While Steering Stocks And Yuan
PBoC Raises FX Reserve Requirement Ratio To 6% From 4%
Nasdaq Enters Correction As Megacap Earnings Fuel AI Concerns
Apple's Stock Drops On Weak Margin Forecast In Ternus’ First Earnings
Nvidia Directs Data Centre Clients To Reduce China Exposure
Pimco CEO Warns AI Financing Is At Risk Of Becoming Excessive
Anthropic Investors Push For Cautious Valuation Closer To $1.5T
OpenAI Hires Former US Army Sec As Military Seeks To Expand AI Use
Oracle Is Near $10 Billion Share Sale At 11% Discount
Disney Plans Thousands Of Layoffs, Targeting 20% Cost Savings

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Written byleos Patrick Munnelly

Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!