Tech stocks resumed their decline in Asian trading as investors digested Tesla’s updated capital expenditure guidance and Elon Musk’s vague comments about a potential SpaceX merger. Tesla’s shares dropped more than 3% in afterhours trading, while SpaceX lost around 1.5%. Musk revealed that the Terafab project would require ‘tens of billions’ in spending, while Tesla cut its fiscal year 2026 capital expenditure by 20% to $20 billion.
Chip and chip-equipment firms also moved lower following Tesla’s earnings call. Bank of Korea Governor Shin highlighted uncertainties related to spillovers from the chip industry, echoing earlier concerns from former Governor Rhee about South Korea’s chip industry cycle ending earlier due to developments in Chinese tech.
In China, 5G communications companies declined as investors assessed the implications of any SpaceX/Tesla merger. Regulatory concerns weighed on e-commerce firms in Hong Kong, with Alibaba dropping more than 5% amid tighter product quality controls and consumer protection measures. AI-modeling firm MiniMax fell over 6% after DeepSeek upsized its fundraising to $15 billion, exceeding earlier speculation of $12 billion.
AI-related credit concerns kept core government bonds in demand, with the US Treasury’s $13 billion 20-year bond reopening yielding 5.469%, significantly higher than the previous auction’s 4.883%. Meanwhile, the probability of a 25bp Fed rate hike to 4.00-4.25% at the next FOMC meeting on October 28th increased to 16.1% from 15.1%.