China’s stocks slip as tech weakness overshadows Fed rate decision
The US Federal Reserve held interest rates steady, as expected, delaying any changes to borrowing costs until after next week's US midterm elections.
China's Shanghai Composite Index experienced a decline of 0.9% by midday on Thursday, as a significant downturn in tech shares overshadowed the Federal Reserve's decision to maintain interest rates at their current level. The benchmark Shanghai Composite index dropped by 0.9%, while the broader CSI300 index fell by 1.2%. Tech shares played a major role in the negative sentiment, with the ChiNext Composite index plunging 3.6% and STAR50 index experiencing a 4.2% decline.
The CSI index tracking China's 5G communications industry fell by 6.1% in early trading. Robot manufacturer Yushu Technology, also known as Unitree, saw its shares slide 4.3% following a third-quarter net profit decrease despite a 70% year-over-year revenue increase in its initial earnings report after going public. James Wang, head of China strategy at UBS Investment Bank Research, expressed caution about investor sentiment in AI hardware, stating that valuations for tech AI hardware companies are nearing historical lows, indicating a potential slowdown in earnings per share growth.
Wang believes investor sentiment on AI remains vulnerable but anticipates a more favorable risk-reward scenario toward the end of the year as investors prepare their portfolios for the upcoming year. Asian shares, in general, reversed their earlier gains as mixed earnings announcements related to AI caused considerable uncertainty, intensifying the focus on Amazon and Intel results that were expected later in the day.
The Federal Reserve maintained interest rates as anticipated, postponing any adjustments to borrowing costs until after the upcoming US midterm elections, while awaiting additional data on inflation, which the central bank noted remains elevated. In Hong Kong, the Hang Seng index only managed a slight 0.1% increase, while the city's tech shares experienced a 2% decline.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
