Asian and US Stocks React to Earnings Reports and Economic Concerns

Asian stocks rose and bonds stabilised at the start of trading on Wednesday following Wall Street’s gain as early indications from the corporate earnings season pointed to strong profits for global companies and bolstered investor confidence. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.5%, led by a 4% gain for Korean shares, while Japan’s Nikkei 225 climbed 1.3%. S&P 500 e-mini futures rose 0.3%. Stocks in the region have steadied since a wrenching selloff last week but have traded in a tight range since then. Overnight, stocks on Wall Street were mildly positive, pushing the S&P 500 0.3% higher as oil prices and Treasury yields eased. With 13% of S&P 500 companies reporting, 86% have beaten earnings estimates, according to LSEG data. “Global equities were mixed, with solid earnings supporting US markets while ongoing concerns around the AI trade and elevated oil and borrowing costs weighed more heavily elsewhere,” Westpac analysts wrote in a note. “Oil prices fell on unconfirmed reports of renewed peace negotiations, before largely retracing the move after the reports were denied.” However, French stocks fell as fears remained around the government’s plans to curb recent unrest. Prime Minister Sebastien Lecornu said the government would reinforce police with a “massive” deployment of troops to quell protests planned for Saturday. The yield on the French 10-year OAT was up 2.7 basis points at 4.94%, nudging the yield differential compared to the German 10-year bund DE10YT=RR 0.3 basis point higher to 153.1 basis points. Brent crude LCOc1 was 1.1% higher at $110.03 a barrel as trading resumed in Asia, extending gains after touching a five-month high during a volatile session on Tuesday as traders weighed a meeting between the Iranian president and Pakistan’s army chief, a key US-Iran mediator, against continued Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf. US envoy Steve Witkoff is due to meet Russian President Vladimir Putin later in the day after what a US official called “constructive” talks with Ukrainian President Volodymyr Zelenskiyy in Norway, as President Donald Trump said it was time for Ukraine to end the war. The yen JPY= was 0.1% weaker against the dollar at 158.33 yen after government data released on Wednesday showed Japan’s exports in September rose 16.7% from a year earlier, missing estimates. Strong demand for semiconductors and AI-related products offset weakness in other sectors. A Reuters poll found a majority of economists believe the Bank of Japan will refrain from hiking interest rates on October 30 before voting for a 25-basis-point increase in December, followed by quarterly hikes. Economists polled also believe the Federal Reserve will skip a hike at its next meeting on October 28 before raising rates in December. Fed funds futures are pricing an implied 83% probability of a hold later this month, little changed from a day earlier, according to the CME Group’s FedWatch tool. The yield on the US 10-year Treasury bond was up 1 basis point at 5.123%. In emerging markets, traders are awaiting a decision from Indonesia’s central bank, which is battling to halt the rupiah’s slide following a market rout from an MSCI warning that it may exclude the country’s stocks from its major benchmarks.