Asian stock markets surged to new highs on Thursday, driven by increased investor enthusiasm for artificial intelligence (AI) and robust consumer spending in China. Major indices across the region benefited from a renewed focus on technology stocks, with Japan’s Nikkei climbing 1.5%, approaching all-time records. Offshore funds played a significant role, purchasing a net 2.5 trillion yen ($16.4 billion) in Japanese equities during the week ending October 4. Taiwan’s stock market also advanced, gaining 1.2% to set a fresh record, while MSCI’s broad index of Asia-Pacific shares outside Japan rose 0.3%.
In China, blue-chip stocks gained 0.4% as markets reopened after a week-long holiday. Beijing reported impressive figures: consumers spent 809 billion yuan ($113.52 billion) and made 888 million trips during the holiday period, indicating strong domestic demand. However, the Chinese government introduced new restrictions on rare earth mineral exports and related equipment, a move that may impact ongoing trade negotiations with the United States.
Global Tech Bull Run Continues as U.S. Markets Hit Record Highs
The rally in AI-related technology stocks extended beyond Asia, propelling the S&P 500 and Nasdaq to record highs in the United States. Investors continued to favor buying into dips, encouraged by optimistic earnings forecasts for the tech sector. According to JPMorgan analysts, projected earnings growth for technology companies has increased to 20.9% for the upcoming reporting season, compared to 15.9% in June. Approximately 81% of tech stocks have seen upward revisions in earnings estimates, led by industry giants Nvidia and Apple.
Overall, third-quarter earnings across sectors are expected to rise by 8%, with revenues projected to grow by 6.3%. This bullish sentiment has fueled confidence in equity markets globally, though European futures showed mixed performance: EUROSTOXX 50 futures eased by 0.2%, FTSE futures fell by 0.5%, and DAX futures slipped by 0.1%. U.S. futures for the S&P 500 and Nasdaq remained steady following Wednesday’s gains.
Oil Prices Decline Amid Easing Geopolitical Tensions and Gaza Ceasefire
Oil prices edged lower as geopolitical risks subsided with news of an initial ceasefire agreement between Israel and Hamas, aiming to end their two-year conflict. Brent crude dropped by 0.6% to $65.89 per barrel, while U.S. crude declined by 0.7% to $62.12 per barrel. The potential reduction in supply disruptions contributed to this downward movement.
The ceasefire plan has drawn international attention, with U.S. President Donald Trump indicating he may travel to Egypt over the weekend to discuss further steps related to the agreement. The calming of tensions in the Middle East relieved one of the major threats that had been supporting higher oil prices in recent weeks.
Currency and Bond Markets React to Federal Reserve Policy Signals
Bond markets showed little reaction to the minutes from the latest Federal Reserve meeting, which revealed that most officials are concerned about inflation risks but support easing monetary policy further. Futures trading suggests a strong likelihood—94%—of another quarter-point rate cut in November, with a total of 44 basis points of easing anticipated by year-end.
Citi economists noted that continued labor market weakness is expected to persuade more Fed officials to support rate cuts at each of the next four meetings. The yield on ten-year U.S. Treasuries edged down slightly to 4.115%, shrugging off a lackluster auction for new notes on Wednesday.
In currency markets, the U.S. dollar maintained its strength against major peers, holding near eight-month highs versus the Japanese yen at 152.54 after gaining 3.5% this week amid worries over increased Japanese government borrowing. The euro stabilized at $1.1641 after briefly touching its lowest point in six weeks due to disappointing German industrial output data for August.
Investors are watching developments in France as President Emmanuel Macron seeks a new prime minister who can navigate challenging budget negotiations.
Gold Holds Firm as Investors Seek Safe Havens
Gold prices remained elevated at $4,037 per ounce—a weekly gain of nearly 3.9%. The precious metal has attracted investor interest due to expectations of continued U.S. rate cuts and growing demand for assets perceived as safe havens amid global uncertainties.
Central banks have also been increasing their gold reserves as a hedge against risks such as sustained declines in the U.S. dollar and potential selloffs in bond markets resulting from increased government borrowing needs.
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