Asian Stocks Muted Amid U.S. Interest Rate Uncertainty; Chinese Shares Rally on GDP Data

Overview: Asian Markets Struggle for Direction

Most Asian stocks were muted on Friday as investors grappled with uncertainty over U.S. interest rates and the upcoming presidential election. However, Chinese shares turned positive following data that indicated the economy grew as expected.

Technology Stocks Exhibit Smaller Losses

While technology stocks experienced relatively smaller losses, Taiwan Semiconductor Manufacturing Company (TSMC) rallied to record highs after posting stronger-than-expected third-quarter earnings. The firm’s performance highlighted robust demand, particularly driven by the artificial intelligence (AI) sector.

Wall Street's Flat Cues Impact Regional Markets

Regional markets took subdued cues from a mostly flat overnight session on Wall Street. Although investors expressed optimism over signs of resilience in the U.S. economy, this enthusiasm was tempered by expectations for a smaller upcoming interest rate cut by the Federal Reserve. U.S. stock index futures remained flat in Asian trade.

Chinese Shares Rise as GDP Meets Expectations

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose by approximately 1.2% each, sharply recovering from an earlier negative start. The Hong Kong Hang Seng index gained 1.6%, bolstered by advances in locally-listed mainland stocks.

Recent gross domestic product (GDP) data revealed that China's economy grew 4.6% year-on-year in the third quarter, meeting expectations. Although quarter-on-quarter growth accelerated, year-to-date GDP growth still lagged below the government's 5% annual target.

Despite Friday's gains helping Chinese stocks recoup much of their weekly losses, the market remains on track for a muted weekly performance. Earlier in the week, Chinese shares faced heavy losses after the government's signals regarding additional stimulus measures lacked the necessary detail to inspire confidence.

TSMC Hits Record High Amid Positive Earnings; Other Chipmakers Lag

Taiwan’s TSMC stood out on Friday, with the company’s shares surging nearly 6% to a record high. The world’s largest contract chipmaker reported stronger-than-expected third-quarter earnings and presented an optimistic outlook, largely benefiting from robust demand in the AI sector.

As a key bellwether for the chipmaking industry, TSMC flagged increasing demand for AI applications. However, other Asian chipmaking stocks generally retreated on Friday, continuing to feel the impact of weak guidance presented by chip equipment maker ASML Holding earlier this week. ASML indicated that chip demand from non-AI applications is likely to remain weak.

Broader Asian Markets Experience Mild Weekly Losses

Broader Asian markets remained within a tight range and were mostly heading for mild weekly declines. Japan’s Nikkei 225 and TOPIX indexes rose slightly as consumer price index data showed inflation increased slightly more than expected in September, with underlying inflation remaining robust.

Australia’s ASX 200 was the worst performer of the day, losing 0.9% as investors locked in profits from a recent record high. Meanwhile, South Korea’s KOSPI fell 0.4%.

Futures for India’s Nifty 50 index indicated a weak open, as the index sank from 25,000 points amid a broad exodus of foreign investors, compounded by some disappointing earnings reports.