Asia markets mixed as tech sector struggles to rebound

Asian markets experienced a mixed performance on Monday, as investors grappled with the aftermath of disappointing earnings from major tech companies. The Nikkei 225 in Tokyo closed down 0.3% at 63,081.86 points, while Hong Kong's Hang Seng Index ended the day up 0.4% at 23,393.32 points. Shanghai's Composite index saw a 1.1% increase to 3,638.03 points.

Traders received some relief from a decline in oil prices following reports that US President Donald Trump aimed for negotiations with Iran instead of escalating the conflict after the elections. Companies heavily invested in AI, such as Amazon, Alphabet, Microsoft and Meta, reported plans to spend over $700 billion on data centers and chips this year.

However, concerns arose over whether this massive investment was justified, as 90% of software companies in the S&P 500 exceeded earnings expectations this season, yet only 70% surpassed revenue targets - a stark contrast to previous quarters where most companies outperformed in profits and sales. Notable tech firms like Apple, Advanced Micro Devices and Palantir were set to release earnings this week.

The Nasdaq experienced a significant drop, falling nearly 3% in New York, while Asian tech stocks faced early-week challenges. Japanese chipmaker Kioxia saw a steep 16% decline after delivering a more subdued outlook than expected, having lost around 70% of its value since its June peak, though it still rose over 200% year-to-date.

Meanwhile, Taiwan's TSMC gained nearly 2%, while South Korea's Samsung added 1.8% and SK hynix jumped 3.8%. The tech sector's mixed results were mirrored in broader markets, with Tokyo, Sydney, Singapore, Wellington, Bangkok, and Taipei posting declines; conversely, Seoul, Hong Kong, Shanghai, Mumbai, and Jakarta showed gains. Oil prices plummeted more than 3% amid hopes for a negotiated resolution to the Iran crisis, with Iran's foreign ministry expressing readiness for a two-day plan to reopen the Strait of Hormuz if Washington compromises.

Despite the deadlock in Israeli elections, the potential for diplomatic progress appears to be improving through intensified mediation efforts by Qatar and regional allies. Discussions centered on sanctions relief, reopening the Strait of Hormuz, and addressing nuclear restrictions and inspections. However, President Trump remained vocal about his intentions to resume military action, while Iran's army spokesman warned that any renewed conflict could extend beyond the previous conflict's duration, emphasizing the uncertainty surrounding the outcome.

Investors closely monitored the US midterms, where Democrats were expected to secure significant victories, potentially seizing control of Congress and imposing a check on Trump's power. Polls indicated Democrats' near-certainty of taking the majority in the House of Representatives and a strong possibility of gaining control of the Senate.