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Asian stocks rally as Nikkei 225 moves above 50,000 mark on easing US-China tensions

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Asian stocks rally as Nikkei 225 moves above 50,000 mark on easing US-China tensions

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New update 2025.10.27 13:38
Asian stocks rally as Nikkei 225 moves above 50,000 mark on easing US-China tensions

update 2025.10.27 13:38

  • Asian stocks appreciate amid easing trade tensions between the US and China, the two largest economies.
  • US and Chinese negotiators reached consensus on key disputes, paving the way for Trump and Xi to finalize a trade deal Thursday.
  • Japan's Nikkei jumped above 50,000, driven by expectations of major fiscal spending under Prime Minister Sanae Takaichi.

Asian stocks start the week on a strong foot amid easing United States (US)-China trade tensions. The top negotiators US and China reached a consensus on major disputes and paved the way for Presidents Donald Trump and Xi Jinping to meet on Thursday in South Korea to finalize a trade deal aimed at easing tensions. Traders are expected to focus on central bank meetings and megacap earnings.

According to CBS News, US Treasury Secretary Scott Bessent said that President Trump's threat to impose 100% tariffs on Chinese goods "is effectively off the table." Bessent added that China has agreed to make "substantial" soybean purchases and to postpone its rare-earth export controls "for a year while they re-examine it."

Japan's Nikkei 225 rises 2% to trade near 50,300 at the time of writing, while Hong Kong's Hang Seng gains 1% to move above 26,400, and South Korea's KOSPI advances 2% to trade around 4,000. Additionally, China's Shanghai Composite rises 1% to reach near 4,000, while the Shenzhen Component gains 1.26%, rising to nearly 13,450.

Asian markets also draw support from a subdued US Dollar (USD) as softer US inflation data helps in keeping the likelihood of the Federal Reserve (Fed) rate cuts higher. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.

Japan's Nikkei surged past the 50,000 mark for the first time on Monday, extending its record-breaking rally amid expectations of significant fiscal spending from the nation's new Prime Minister Sanae Takaichi, per Reuters.

AsianStocks FAQs

Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region's developed economies, the Japanese Nikkei - which represents 225 companies on the Tokyo stock exchange - and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.

Asia's main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.

Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government's fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.

Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.


Date

Created

 : 2025.10.27

Update

Last updated

 : 2025.10.27

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