Stock rally powers on as Asian shares hit record

Shares of rare-earths companies jumped after a US-Australia deal while gold held near its record highs

A rally in global stocks extended with Asian shares trading above their record close as easing trade tensions and optimism about interest-rate cuts bolstered sentiment.

MSCI’s regional stock gauge topped its record close with benchmarks in Japan and South Korea both at all-time highs. An all-country world index was also poised to for a new peak and equity-index futures indicated more gains for US benchmarks after Monday’s rally. Japanese shares rose amid expectations the pro-stimulus Sanae Takaichi will become the nation’s next prime minister.

Shares of rare-earths companies jumped after a US-Australia deal while gold held near its record highs. The Treasury 10-year yield traded below 4% as falling oil prices eased concern about inflation before Friday’s consumer-price data announcement. Brent crude oil hovered close to $60 a barrel, heading for the lowest close since May. The Swiss franc neared its highest against the euro since 2015.

Asian markets are finding a fresh momentum after the S&P 500 logged its biggest two-day gain since June on Monday, with about 85% of companies beating profit estimates so far. Strong earnings are providing more legs to a tech-powered rally as investors speculate the Federal Reserve will cut rates later this month just trade tensions between the US and China recede.

“Investors have a lot to feel comfortable about, given the backdrop of falling rates and structural AI demand growth,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Barring a sharp slowdown in the US economy, another episode of US-China tensions, or irrefutable evidence that AI is just hype, the markets could be well-supported into year end.”

While trade tensions continued to drive investor emotion and volatility, drawdowns have been short lived, as retail investors see them as opportunities to add risk to their portfolios. Global stocks have rallied to new highs since their April slump as traders bet the billions spent by companies on artificial intelligence will yield profits in the future.

That optimism faces a test as companies report earnings, with Netflix Inc. and Tesla Inc. reporting this week.

Adding to the mood is the progress in US-China trade talks. While President Donald Trump reiterated his threat to follow through on a tariff hike on Chinese goods “if there isn’t a deal” by Nov. 1, he said he plans to meet with President Xi Jinping next week.

Earlier this month, markets were roiled as Trump raised the prospect of a sky-high tariff rate, citing China’s “hostile” export controls. Soybean futures rallied Monday, with growers holding out hope that Trump will make a deal with China to restart stalled American exports.

Meanwhile, South Korea’s early exports advanced in October, aided by resilient semiconductor demand even as US tariffs weighed on momentum and holidays created distortions. The Kospi index jumped 1.2%.

“The strong start to the week on Wall Street has helped Asian markets to open higher today,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney. “A softening in trade concerns has also helped overall sentiment, with investors taking a glass 75% full look at the market at the moment.”

On inflation data, after a delay caused by the US government shutdown, the Bureau of Labor Statistics is set to release September’s consumer price index on Friday. The data, originally slated for Oct. 15, will give Federal Reserve officials a key reading on inflation ahead of their Oct. 30 policy meeting.

The data may take on greater importance due to the government shutdown-driven data drought, said Rick Gardner at RGA Investments. He still sees a Fed cut in October and noted that a key test will be Big Tech earnings, with investors looking for clarity on how spending on artificial intelligence is leading to profitability.

“We are seeing the typical seasonal volatility in October, but the recent swings have been relatively shallow by historical standards, as the buy-the-dip mentality appears to be in play,” Gardner said.

Meanwhile, in Japan, Takaichi is poised to become the nation’s first female prime minister, taking on the challenges of quelling discontent over the cost of living, dealing with the Trump administration and reviving the fortunes of a ruling party that has lost its dominance at the ballot box.