Investors in Asian markets take profits on the 4th

'South Korea, Japan and Taiwan' markets that had staged record rallies all fell

US dollar futures fell amid unclear prospects for rate cuts and weak manufacturing data

Investors in Asian stock markets, which had staged record rallies on hopes of eased US-China trade tensions and optimism about artificial intelligence (AI), engaged in widespread profit-taking on the 4th. With US economic indicators showing weakness and the outlook for a December rate cut dimming, major Asian markets including South Korea, Japan, Taiwan and China all fell.

South Korea's Kospi, which had surged 2.8% the previous day to a record high, fell 2.37% that day.

Japan's Nikkei 225 also rose 0.4% in early trading to a record 52,636.87 but then fell 1.74%.

Taiwan's Taiex index also recorded an early-session high before closing down 0.8%.

Hong Kong's Hang Seng index fell 0.9% and China's listed blue chips fell 1.1%.

The US dollar reached its highest level against the yen in about nine months and its highest against the euro in three months.

Although the previous day the S&P 500 and the Nasdaq rose, US stock index futures fell that day, with S&P 500 futures down 0.9% and Nasdaq futures down 1.3%.

The pan-European STOXX 600 index also opened lower in European markets.

What had propelled the Nasdaq's rise the previous day was Amazon's $38 billion cloud services deal with OpenAI.

IG analyst Tony Cicamore said, "The market is wary of a rotation trade centered on AI with Nvidia at the center of everything."

The US dollar has strengthened as the Fed's stance on a December rate cut has become unclear.

The US dollar index, which measures the dollar's value against the euro, the yen and four other currencies, topped 100 for the first time in three months. Against the yen it briefly rose to 154.48 yen for the first time since February 13 this year. Against the euro it rose to $1.1498 per euro for the first time since August 1. However, as stock index futures fell and investors returned to buying the yen and the euro, the dollar index fell back below 100.

By contrast, gold fell 0.6%, trading around $3,977 per troy ounce.

According to a manufacturers' survey released the previous day by the Institute for Supply Management (ISM), conditions in the US factory sector are poor. With new orders weak, US manufacturing contracted for the eighth consecutive month in October.

Polarized views among Fed officials on rate policy are also a source of concern for investors.

Chicago Fed President Austan Goolsbee said on the 3rd that inflation remains well above the Fed's 2% target and that further rate cuts should be approached cautiously. However, Fed Governor Steve Myron reaffirmed the view that rates should be cut significantly. Fed Chair Jerome Powell said last week that a rate cut could be the last of the year.

According to CME FedWatch, investors see a 67.3% chance of a rate cut in December. This is a sharp decline from 90.5% a week earlier.

Oil prices fell after OPEC+'s decision to temporarily pause production increases in the first quarter was interpreted as a signal of oversupply. Brent crude futures fell 0.4% to $64.65 per barrel, and US West Texas Intermediate (WTI) fell 0.4% to $60.82 per barrel.

Guest reporter Kim Jeong-a kja@hankyung.com