Asian stocks climb as strong earnings buoy Wall Street

Asian stocks climbed and bonds remained stable as Wall Street experienced an increase on October 21, with early reports from the corporate earnings season indicating strong profits for global companies and bolstering investor confidence. The MSCI's Asia-Pacific index outside Japan rose 1.5%, boosted by a 4% gain in Korean shares, while Japan's Nikkei 225 gained 1.3%. S&P 500 e-mini futures climbed 0.3%. Regional stocks have stabilized after a significant sell-off last week, trading within a narrow range since then.

On Wall Street, stocks showed mild positivity, with the S&P 500 rising 0.3% as oil prices and Treasury yields eased. Of the companies that had reported earnings, 86% surpassed estimates, according to LSEG data. Westpac analysts stated that global equities were mixed; while US markets benefited from solid earnings, concerns about AI trade and elevated oil and borrowing costs had a more profound impact elsewhere.

French stocks declined due to ongoing concerns about the government's plans to address recent unrest. French Prime Minister Sébastien Lecornu announced a "massive" deployment of troops to calm protests planned for October 24. The yield on the French 10-year OAT rose 2.7 basis points to 4.94%, increasing the yield differential with the German 10-year bund by 0.3 basis point to 153.1 basis points.

Brent crude oil prices increased by 1.1% to $110.03 a barrel as trading resumed in Asia, following a five-month high on October 20. This rise was driven by traders weighing a meeting between Iran's president and Pakistan's army chief, a crucial US-Iran mediator, against continuous Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.

US envoy Steve Witkoff is scheduled to meet Russian President Vladimir Putin later in the day following "constructive" talks with Ukrainian President Volodymyr Zelensky in Norway, while US President Donald Trump suggested it was time for Ukraine to end the war.

The Japanese yen weakened by 0.1% against the dollar to 158.33 yen after government data revealed Japan's exports in September grew 16.7% year-over-year, falling short of expectations. Strong demand for semiconductors and AI-related products helped offset weakness in other sectors. According to a Reuters poll, most economists believe the Bank of Japan will not raise interest rates on October 30, instead voting for a 25-basis-point increase in December, followed by quarterly hikes.

Similarly, economists surveyed anticipate the Federal Reserve will refrain from a rate hike at its meeting on October 28, but raise rates in December. Fed funds futures indicate an 83% probability of a rate hold in October, 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 drop after an MSCI warning that it may exclude the country's stocks from its major benchmarks. Bitcoin increased by 0.3% to $82,988.76, while ether rose by 0.2% to $2,452.59.