Asia stocks fall as Apple outlook weighs; RBA raises rates to 18-yr high

Most Asian stocks fell on Tuesday as investors assessed Apple’s earnings outlook and positioned for the U.S. midterm elections, while the Reserve Bank of Australia raised interest rates for the fifth time this year to curb persistent inflation.

The moves followed losses on Wall Street, where the S&P 500 fell 0.5% on Monday, and the Nasdaq Composite dropped 1.1%, as weakness in technology shares weighed on sentiment.

U.S. stock futures edged lower in Asian trading by 06:26 GMT, as investors remained cautious ahead of Tuesday’s U.S. midterm elections, which could reshape the balance of power in Congress and affect President Donald Trump’s policy agenda.

Traders weigh Apple results; KOSPI falls 4%

Apple (NASDAQ:AAPL) shares came under pressure after the iPhone maker forecast lower gross margins for the crucial holiday quarter, citing rising memory-chip costs, and projected services revenue growth that fell short of Wall Street expectations.

The company’s outlook added to concerns over the cost and profitability of technology investment, with investors also assessing whether heavy spending on artificial intelligence will deliver sufficient returns.

South Korea’s KOSPI led declines in Asia, with the benchmark dropping nearly 4%.

China’s Shanghai Composite slipped 1.2%, while the blue-chip Shanghai Shenzhen CSI 300 edged down 0.7%. Hong Kong’s Hang Seng traded 0.2% higher.

Japanese markets were closed for a public holiday.

Singapore’s Straits Times Index fell 0.7%, while India’s Nifty 50 gained 1.1%.

RBA hikes rates to 18-yr high

Australia’s S&P/ASX 200 rose 0.3% after the Reserve Bank raised its cash rate by 25 basis points to 4.85%, its highest level since 2008, as inflation remained stubbornly high.

The decision marked the fifth rate increase this year and came amid concerns that elevated energy costs and domestic price pressures could keep inflation above target.

The decision was split, with six board members voting for a hike and three preferring to leave rates unchanged.

In China, the People’s Bank of China said it would raise the foreign exchange deposit reserve ratio for financial institutions to 6% from 4%, effective November 15, in a move aimed at strengthening management of foreign exchange liquidity.

Investors were also watching developments in the Middle East after oil prices fell more than 7% on Monday on hopes for progress in U.S.-Iran peace talks. 

However, a Wall Street Journal report said that the U.S. attacked Iran’s Qeshm Island on Monday.