Asia Market Wrap - Asian Stocks Retreat
Asian stock markets fell for the second day in a row on Thursday, following Wall Street's selloff. This decline was driven by disappointing earnings from major US tech companies and growing geopolitical concerns over new US sanctions against Russia and potential new export controls targeting China.
The broader Asia-Pacific index fell 0.4%, while Japan's Nikkei index dropped 1.5%. Chinese stocks fell as much as 1.1% on news that the White House might curb a wide range of software-linked exports to retaliate against Beijing's rare earth restrictions.
South Korean stocks also declined, particularly for tech hardware makers, even as the Bank of Korea kept interest rates steady as expected.
Adding to the tech gloom, Tesla shares fell 3.8% in after-hours trading because its profit did not meet analyst expectations, despite high revenue.
Market participants are now watching for a policy statement from China's officials wrapping up the Fourth Plenum and an upcoming meeting between US Treasury Secretary Scott Bessent and his Chinese counterparts.
European Session - Euro Stocks Rise
European stocks rose slightly on Thursday, boosted by several companies reporting better-than-expected earnings, while investors remained focused on the trade conflict between the US and China.
The main STOXX 600 index gained 0.2%. US President Trump offered confusing signals about his upcoming meeting with the Chinese President, first saying the meeting might not happen, but then saying he expected to reach agreements.
Trade tensions increased due to reports that the US is considering export curbs on China to retaliate for China's rare earth restrictions. Separately, as the US and EU adopted new sanctions against Russia over the Ukraine war, European energy stocks rose 2.3% following a jump in oil prices; major players like BP and Shell saw gains over 2%.
In company news, Nokia jumped 10.8% after beating profit forecasts, and luxury group Kering rose 7.8% after its sales fell less than analysts feared.
On the FX front, the US dollar gained strength against most other major currencies on Thursday, with the dollar index rising 0.11%.
The dollar increased by 0.28% against the Japanese yen, hitting its highest level since October 14.
Meanwhile, the British pound weakened slightly, falling 0.12% against the dollar, and the euro also eased 0.12%.
Currency Power Balance
Source: OANDA Labs
Oil prices surged by over 4% on Thursday, continuing gains from the day before. The main reason for this sharp rise was the new US sanctions imposed on major Russian oil companies like Rosneft and Lukoil over the Ukraine war.
Because of these sanctions, refineries in China and India will now be forced to find new oil suppliers to avoid being cut off from Western banks, increasing demand and pushing the price of Brent crude up to $65.30 a barrel and US West Texas Intermediate crude up to $61.06 a barrel.
Gold prices increased on Thursday because rising global political and economic tensions made safe-haven assets more attractive to investors. Specifically, new US sanctions targeting Russia and the possibility of new export controls against China increased geopolitical worries.
Spot gold rose by 0.6% to trade at $4,119.54 per ounce, recovering after hitting a nearly two-week low in the previous trading session.
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Economic Calendar and Final Thoughts
The most important issue for financial markets right now is the unstable relationship between the US and China. Yesterday's developments have had a negative impact on sentiment with the mixed messaging out of the US not helping matters.
Sanctions on Russian Oil is another geopolitical risk which is back in the spotlight and affecting overall sentiment.
Given that it is a quiet day on the data front, developments around these two geopolitical risks could be a key driver for the market ahead of tomorrow's US CPI release.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Chart of the day - FTSE 100 Index
From a technical standpoint, the FTSE 100 has extended its rally since breaking above the 100-day MA.
The index is now trading just shy of its all-time highs around the 9592 handle.
Momentum remains bullish and thus a fresh all-time high print cannot be ruled out.
The one concern from bulls may come from the RSI. The period-14 RSI on four-hour timeframe is now hovering in overbought territory and this could potentially lead to some profit taking which in turn could push prices lower.
The bullish structure remains intact as long price holds above the swing low at 9500, with a candle close below signaling a change in structure.
FTSE 100 Index Four-Hour Chart, October 22. 2025
Source: TradingView.com (click to enlarge)
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