Asian stocks climb as strong earnings buoy Wall Street

Asian stocks experienced a rise on Wednesday, alongside bonds remaining stable, as the market began trading following Wall Street’s increase. Early results from the corporate earnings period indicated robust profits for global companies, which boosted investor confidence. The MSCI’s Asia-Pacific index, excluding Japan, climbed by 1.5%, driven by a 4% gain in Korean shares, while Japan's Nikkei 225 increased by 1.3%.

The S&P 500 e-mini futures also rose by 0.3%. Stocks in the region have stabilized since a sharp sell-off the previous week but have since fluctuated within a narrow range. On Wall Street, stocks initially showed mild positivity, with the S&P 500 rising 0.3% as oil prices and Treasury yields declined. Out of the 13% of S&P 500 companies that have reported, 86% have exceeded earnings expectations, according to LSEG data.

Westpac analysts noted that while global equities were mixed, strong earnings supported US markets, whereas ongoing concerns about the AI trade and high oil and borrowing costs affected other regions. Brent crude prices increased by 1.1% to $110.03 a barrel after trading resumed in Asia, reaching a five-month high on Tuesday as traders balanced a meeting between the Iranian president and Pakistan’s army chief with ongoing attacks by the Houthis in the Gulf.

The US envoy, Steve Witkoff, is scheduled to meet Russian President Vladimir Putin later in the day following "constructive" discussions with Ukrainian President Volodymyr Zelenskiy in Norway, as President Donald Trump suggested Ukraine should end the war. The yen weakened by 0.1% against the dollar, reaching 158.33 yen following Japanese government data showing a 16.7% year-on-year increase in exports in September, which surpassed expectations.

The primary driver behind this growth was strong demand for semiconductors and AI-related products. Economists' polls suggest the Bank of Japan may not raise interest rates at its meeting on October 30, instead opting for a 25-basis-point increase in December, followed by quarterly hikes. Similarly, the Federal Reserve is expected to skip a rate hike at its meeting on October 28 before raising rates in December.

Fed funds futures indicate an 83% likelihood of a hold this month, unchanged from the previous day. In emerging markets, traders are anticipating a decision from Indonesia’s central bank, which is striving to stabilize the rupiah following a market plunge triggered by an MSCI warning that it might exclude the country’s stocks from its major indices. Bitcoin rose by 0.3% to $82,988.76, while ether increased by 0.2% to $2,452.59.