Global stocks extended their rally, with Asian shares trading above record closing levels, supported by easing trade tensions and growing optimism about interest rate cuts.
MSCI's regional stock index surpassed its all-time closing high, while indices in Japan and South Korea hit new record highs.
The global index of all countries also approached a new record high, while US index futures in Asian trading pointed to additional gains after a strong rally on Monday. Japanese stocks rose amid expectations that Sanae Takaichi, a supporter of stimulus policies, will become Japan's next prime minister.
Rare metals and gold continue to rise
Rare earths stocks jumped after the US-Australia agreement, while gold held near record highs.
US 10-year Treasury yields fell below 4% as oil prices fell, easing inflation concerns ahead of Friday's consumer price data. Brent crude settled near $60 a barrel, heading for its lowest close since May, while the Swiss franc approached its highest level against the euro since 2015.
US corporate earnings support the upward trend
Asian markets are enjoying renewed momentum after the S&P 500 posted its biggest two-day gain since June on Monday, with about 85% of companies' earnings beating expectations so far.
Strong earnings continue to fuel a rally in technology stocks, as investors bet the Federal Reserve will cut interest rates later this month as trade tensions between the United States and China ease.
“There is plenty for investors to feel comfortable about, given the low interest rate environment and structural growth in demand for AI,” said Vie-Sern Ling, Managing Director at Union Bancaire Privée.
He added: Unless we witness a sharp slowdown in the US economy, a new round of US-China tensions, or conclusive evidence that AI is just a bubble, markets may remain supported until the end of the year.
Easing trade concerns boost confidence
Although trade tensions continue to drive investor sentiment and increase volatility, market downturns have been short-lived, with individual investors viewing these declines as opportunities to increase risk in their portfolios.
Global stocks have risen to new record highs since their April slump, as traders bet that the billions of dollars companies are spending on artificial intelligence will translate into future profits.
This optimism faces a new test with corporate earnings releases, with Netflix and Tesla scheduled to announce their results this week.
The positive mood is also bolstered by progress in trade talks between the United States and China. Although US President Donald Trump renewed his threat to raise tariffs on Chinese goods if an agreement is not reached by November 1, he confirmed his intention to meet with Chinese President Xi Jinping next week.
Markets had been in turmoil earlier this month after Trump raised the possibility of imposing very high tariffs, accusing China of imposing aggressive export restrictions. Soybean futures jumped on Monday as farmers hoped Trump would reach an agreement with China that would restore stalled US exports.
Korean exports rise on chip demand
South Korea's primary exports rose in October, driven by strong demand for semiconductors, despite the impact of US tariffs and holidays. The Kospi index jumped 1.2%.
A strong start to the week on Wall Street helped Asian markets rise today, said Nick Twidale, senior analyst at AT Global Markets in Sydney.
He added: The decline in trade concerns has contributed to strengthening overall sentiment, as investors now view the market with clear optimism.
US inflation data awaits
After being postponed due to the government shutdown, the US Bureau of Labor Statistics is scheduled to release its September Consumer Price Index (CPI) data on Friday, originally scheduled for release on October 15. This data will provide the Federal Reserve with a key reading on inflation before its October 30 meeting.
Rick Gardner of RGA Investments said the data could take on added significance due to the lack of statistics resulting from the government shutdown, adding that he still expects a rate cut in October.
He noted that a key test for the markets will be the results of major technology companies, as investors seek to understand the extent to which AI spending translates into tangible profits.
He added: We are witnessing normal seasonal fluctuations in October, but recent movements have been relatively limited by historical standards, and it appears that a buy-on-the-dip mentality is still prevalent.
Takaichi is poised to become Japan's first female prime minister.
In Japan, Sanae Takaichi is poised to become the country's first female prime minister, facing challenges that include calming public discontent over rising living costs, dealing with the Trump administration, and reviving the fortunes of the ruling party, which has lost electoral dominance in recent years.
