Apple’s weak outlook and RBA’s 18-year high rate hike drive Asian market volatility

Key points

• Apple shares fell 1.83% after the company forecast lower gross margins for the holiday quarter due to rising memory-chip costs and projected services revenue growth that missed Wall Street expectations.
• South Korea’s KOSPI index led regional losses, dropping nearly 4%, while China’s Shanghai Composite slipped 1.2% and the CSI 300 fell 0.7%.
• The Reserve Bank of Australia increased its cash rate by 25 basis points to 4.85%, the highest level since 2008, in a split decision aimed at curbing persistent inflation.
• China’s central bank announced it would raise the foreign exchange deposit reserve ratio for financial institutions to 6% from 4%, effective November 15, to manage liquidity.
• Oil prices fell more than 7% on Monday amid hopes for U.S.-Iran peace talks, but rebounded after reports emerged of a U.S. strike on Iran’s Qeshm Island.

Background

This follows a period of rising interest rates in Australia, where the RBA had already hiked rates to a 15-year high in September 2026. The current move marks the fifth rate increase this year, continuing a trend driven by stubborn inflation and global bond yield pressures. Earlier in 2026, Asian tech stocks had also faced volatility due to AI spending concerns, setting the stage for the current sell-off triggered by Apple's specific guidance.

Why it matters

The combination of major tech earnings misses and aggressive monetary tightening in Australia highlights growing concerns about inflation persistence and the return on AI investments. These factors, alongside geopolitical instability in the Middle East and upcoming U.S. elections, create a complex risk environment for global investors.

What to watch

Investors will closely monitor the results of the U.S. midterm elections, which could reshape congressional power and impact President Trump’s policy agenda. Additionally, the market will watch for further signs of inflation in Australia and any developments in U.S.-Iran relations that could affect oil prices.