Oil Rises as Typhoon Champi Hits Taiwan
Oil prices climbed to a five-month high on Friday, with the benchmark Brent North Sea crude trading near $115 a barrel. The rally follows speculation that further attacks by the United States and Israel could follow the conclusion of the US mid-term elections, adding to geopolitical uncertainty in the region.
Asia’s mixed close
Asian markets ended the week with mixed results. Technology firms managed to recover some of their recent losses, while broader stock markets in Europe and North America mostly declined. The rally in chip stocks in South Korea helped the local market finish in the green, even as the broader index shed more than 2% at the opening bell.
Tech shares dragged down the Nasdaq and S&P 500 in New York, while the Dow managed to gain ground. This shift reflects a broader reallocation of capital away from high-flying AI names and toward more traditional industrial companies. Investors are now demanding better earnings and clearer profitability timelines to justify the valuations seen earlier in the year.
Shares of Meta and Lam Research fell sharply this week despite beating earnings forecasts, highlighting the difficulty companies face in meeting investor expectations. “Even positive news is being ignored,” said Fawad Razaqzada of FOREX.com. “Strong results are no longer enough if the outlook fails to match an already demanding valuation. Investors are becoming much less forgiving.”
Safe-haven assets gained traction as the week progressed. The Japanese yen rallied against the dollar, supported by strong inflation data that increased the likelihood of another interest rate hike in Japan. The currency has struggled in recent years due to the wide interest rate gap with the United States and concerns over Japan’s fiscal outlook.
Taiwan battens down
Key developments in Asia were dominated by the arrival of Typhoon Champi, the 30th storm of the year. The storm shut down Taiwan and is being closely watched in Japan as it moves toward the northwestern Pacific. Most shops and schools were closed across the island on Friday, and hundreds of people were evacuated from their homes.
At least one person was killed in Taiwan after being swept away by waves whipped up by the typhoon, and dozens were injured. Champi briefly reached super typhoon status but has been weakening as it approaches the island. The Joint Typhoon Warning Center reported maximum sustained wind speeds of 167 kilometres per hour.
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The storm is expected to dump up to 90 centimetres of rain from Thursday to Saturday, with northeastern Taiwan facing the brunt of the downpour. “People should be aware that the strong winds and extremely heavy rain will continue into the first half of tomorrow,” warned Lu Kuo-chen of the Central Weather Administration. Work and classes were cancelled across nearly all of Taiwan, and the stock exchange remained closed.
The storm season has been turbo-charged by the El Nino weather phenomenon, which has caused unprecedented warming in the equatorial Pacific. The United Nations warned that the El Nino system gripping the planet is heading off the charts, and countries should prepare for the worst. The warming phase of the natural climate cycle temporarily raises sea temperatures in the tropical Pacific, triggering changes in weather that can increase the risk of drought and flooding.
Micron wage talks suspended
Amid the storm and market volatility, a labor dispute at a Micron Technology plant in Taiwan escalated on Friday. Hundreds of workers at the Taoyuan facility have rejected the US memory chip giant’s proposal for a new profit-sharing system. The union representing the employees declared the “struggle is far from over” after a vote.
Micron makes around 50-60% of its chips in Taiwan and has been negotiating with two unions representing 12,000 of its 15,000 workers. While the company reached an agreement with the union at its larger Taichung plant, the Taoyuan union is still at an impasse. Around 70% of the more than 2,300 members voted to reject the proposal, citing the company’s failure to respond to their demands.
Exploding global demand for AI data centre chips has sent Micron’s revenues soaring, yet workers are seeking a larger share of those profits. The US company’s share price has ballooned more than 300% over the past year. Micron Taiwan chairman Lu Donghui announced plans to introduce a quarterly profit-sharing bonus system starting in fiscal 2027 for its global workforce, in addition to existing annual bonuses. The company said it would continue discussions with the Taoyuan union on October 27 in a spirit of mutual respect.
China’s property crisis weighs
The property sector in China continues to face significant headwinds. Beijing has been implementing policies aimed at stabilising the sector, yet prices for new homes have kept falling. Analysts note that the government’s focus is on preventing a disorderly default rather than a sudden price collapse. However, the market remains weak.
Global banking sector holds
The global banking sector has shown resilience despite the turmoil earlier in the year. Banks have managed to strengthen their balance sheets since the failures of several lenders. This stability has helped calm fears of a contagion effect spreading through the financial system.
