Kospi Falls 3.7% as the US Chip Rout Spreads to Asia, Tokyo Shuts for Culture Day and the RBA Hikes to 4.85%

South Korea took the brunt of Asia's Tuesday session again. The Kospi fell 3.7 percent and the Kosdaq 3.8 percent as the sell-off in US chipmakers crossed the Pacific, while Tokyo was closed for Culture Day and Hong Kong's Hang Seng edged 0.4 percent higher, investingLive reported. Shanghai slipped 0.7 percent despite the People's Bank of China saying it would push financial institutions to make wider use of stock-support tools.

It is the Kospi's third violent drop in three weeks. We covered the 4.9 percent fall on 30 October; Monday's 2.2 percent rebound to 5,859.08 has now been given back and more.

Why did Korean chip stocks fall on Tuesday?

Because US chip stocks kept falling. A gauge of American semiconductor makers extended its three-day rout to 12 percent on Monday and the Nasdaq 100 is now 10 percent below its peak, the usual definition of a correction, CNBC-TV18 noted in its morning Asia wrap, which had the Kospi down more than 3.34 percent at the open, Taiwan's TAIEX down 1.21 percent and the MSCI Asia Pacific index down 0.5 percent. SK Hynix was down 5.71 percent at one point as the Kospi traded below 5,700, TradingKey reported. Wall Street's Monday close set the tone: the Nasdaq Composite lost 1.07 percent to 25,164.32 and the S&P 500 0.51 percent to 7,541.55, while the Dow rose 0.41 percent to 51,983.98, with Micron down 5.85 percent, Oracle down 8.85 percent after a $20 billion capital raise and Intel down another 8.8 percent, the Seoul Economic Daily reported. Apple's shares fell after hours on a thinner margin outlook, adding to the mood in Seoul and Taipei.

What did the Reserve Bank of Australia decide?

It raised its cash rate by 25 basis points to 4.85 percent, the highest in 18 years and the fifth increase this year, on a 6-3 vote with three members preferring to hold, investingLive reported. The bank lifted its inflation forecasts, now seeing headline inflation peaking at 4.5 percent and staying above 3 percent until late 2027, and said it would remain "attentive to the data" without signalling another move. The Australian dollar softened after the decision, having already slipped on yuan weakness; the offshore yuan opened near 6.6468 per dollar.

What else moved in Asian hours?

Oil ticked higher after Monday's 7.6 percent plunge, with Brent at $105.25 at 01:04 GMT after reports that US forces had struck Iran's Qeshm Island; we have that story separately this morning. Hang Seng futures were up 0.7 percent early and India's GIFT Nifty pointed to a positive open. Japan's absence thinned the session: with no Nikkei or Topix print and no yen cash trade of note, Korea's screens were the only large ones in the region, and they were red.

The next test is in Washington rather than Seoul. Americans vote today, the first results arrive as Asian markets open on Wednesday, and AMD reports after the US close, which will tell chip investors whether the three-day rout was about Intel's guidance or about the whole sector.