Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Asian equity markets rallied on Friday, buoyed by stronger-than-expected corporate earnings from Wall Street, notably Intel, and indications of a potential de-escalation in U.S.-China trade tensions. Oil prices, however, eased following new U.S. sanctions targeting Russian energy suppliers. Investor sentiment was also supported by Japan’s new prime minister pledging economic stimulus measures, which sent the Nikkei share gauge higher.
U.S.-China Trade Optimism
Market sentiment received a significant boost after the White House confirmed that President Donald Trump is scheduled to meet Chinese President Xi Jinping next week during an Asian tour. This meeting comes as a tariff deadline looms, with a potential additional 100% U.S. tariff on Chinese imports set for November 1.
Capital.com senior market analyst Kyle Rodda suggested the announcement signaled confidence in positive outcomes from upcoming trade talks in Malaysia between high-level delegates. Rodda stated, “It’s unlikely either side would set their leader up for an awkward failure.”
U.S. Economic Data and Federal Reserve Outlook
With the U.S. government shutdown obscuring most economic data, attention turned to Friday’s consumer price figures, which are crucial for signals ahead of next week’s Federal Reserve policy meeting. The U.S. Bureau of Labor Statistics confirmed it would publish the core Consumer Price Index (CPI) report despite the 23-day shutdown, primarily to assist the Social Security Administration.
The core CPI print, a key metric for Fed policy, is widely anticipated to remain steady at 3.1%. Skye Masters, head of markets research at National Australia Bank, warned that a higher-than-expected reading could prompt investors to scale back expectations for future Fed rate cuts.
Japanese Economic Policy and Market Performance
Japan’s Nikkei stock index advanced 1.4% amid domestic economic developments. Data released Friday indicated that Japan’s core consumer prices increased 2.9% year-on-year in September, staying above the central bank’s 2% target and maintaining market expectations for a near-term interest rate hike.
Furthermore, Japan’s new Prime Minister Sanae Takaichi pledged to accelerate a defense spending target by two years. Her government is pursuing proactive fiscal expansion, focusing on strategic priorities.
Corporate Earnings Provide Tailwinds
Intel (INTC.O) shares surged in after-hours trading after the technology giant exceeded profit expectations for its September quarter. This positive report contributed to a series of favorable U.S. earnings announcements.
Looking ahead, the coming week will feature earnings reports from five of the “Magnificent Seven” U.S. companies, including Apple (AAPL.O) and Microsoft (MSFT.O), which are key players in the artificial intelligence sector.
Global Market and Commodity Movements
Broader Asian markets reflected the positive sentiment, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 0.4%. China’s Shanghai Composite Index gained 0.4%, reaching its highest level since August 2015, while the blue-chip CSI300 Index climbed 0.7%.
In currency markets, the U.S. dollar index saw a 0.1% increase to 99.06. The Japanese yen weakened 0.2% against the dollar to 152.91, touching a two-week low, while the euro slid 0.1% to $1.1603.
Commodity markets saw varied performance. Spot gold fell 0.3% to $4,112.79 an ounce, putting it on track for its worst weekly performance since May. Oil prices eased on Friday, with U.S. crude dropping 0.4% to $61.55 a barrel and Brent falling 0.4% to $65.76 per barrel, despite earlier surges driven by new U.S. sanctions on major Russian suppliers Rosneft and Lukoil.
Market Outlook
Overall, Friday’s market activity reflected investor optimism driven by robust corporate earnings and hopes for de-escalation in U.S.-China trade tensions. As key U.S. inflation data approaches and central bank meetings loom, global markets remain attentive to economic indicators and policy shifts.
