Dollar holds steady ahead of Fed rate decision

SHANGHAI: China's stock market saw a decline on Thursday, with the Federal Reserve's decision to keep interest rates unchanged overshadowing a deepening selloff in tech shares. By midday, the Shanghai Composite index dropped 0.9%, while the blue-chip CSI300 index fell 1.2%. Among the main culprits were tech shares, with the ChiNext Composite index falling 3.6% and the tech-focused STAR50 index tumbling 4.2%.

The CSI 5G communications index, which tracks the industry, plunged 6.1% in early trading. Even Yushu Technology, a robot maker, suffered a 4.3% drop following its third-quarter earnings report, where net profit fell despite revenue rising 70% from a year earlier.

UBS Investment Bank Research's James Wang noted that valuations for AI hardware names were close to a historical low, suggesting a significant slowdown in earnings per share growth. He warned that investor sentiment on AI was fragile but believed that the risk-reward ratio was becoming more attractive, potentially leading to renewed interest towards the end of the year as investors rebuild their portfolios for the new year.

Meanwhile, Asian shares across the region gave up earlier gains as AI-related earnings announcements yielded mixed results, intensifying the pressure on Amazon and Intel's upcoming results. The Federal Reserve held interest rates steady as expected on Wednesday, postponing any changes until after the upcoming US midterm elections, while awaiting further inflation data.

The central bank stated that inflation remained elevated. In Hong Kong, the Hang Seng index saw a slight increase of 0.1%, while the city's tech shares declined by 2%.