Markets surge on hopes for a US-China truce and renewed optimism in AI tech; US stock indexes lead gains; the yen softens on inflation data.
Bullish reversal in US stock indices, Hong Kong’s HSI on track for first weekly gain since 6 October
Key takeaways
- US stocks rebounded strongly on 23 October, led by the Russell 2000 and Nasdaq 100, as easing US-China trade tensions and renewed AI optimism lifted market sentiment.
- US-China relations showed progress, with confirmation of a Trump-Xi meeting at the upcoming APEC summit, signalling a potential extension of the trade truce beyond November 10.
- Asia markets and currencies diverged, as Hong Kong’s Hang Seng Index posted a weekly rebound while the Japanese yen weakened further amid slower domestic inflation.
On Thursday, October 23, major US stock indices rebounded, erasing the previous day’s losses and closing near session highs. Sentiment improved amid easing US-China trade tensions, while renewed optimism in the Artificial Intelligence (AI) sector fuelled strong intraday gains in mega-cap technology stocks, including Nvidia and Amazon.
The small-cap Russell 2000 and Nasdaq 100 led with gains of 1.3% and 0.9% respectively, while the S&P 500 added 0.6% and the Dow Jones Industrial Average trailed behind with a modest gain of 0.3%.
The US White House administration has announced that US President Trump and Chinese President Xi will meet next Thursday, 30 November, on the sidelines of the APEC summit in South Korea. Interestingly, this announcement came out before this weekend's meeting between the US Treasury Secretary Scott Bessent and China Vice Premier He Lifeng in Malaysia. Hence, it increases the possibility of a US-China trade truce extension beyond the current expiry date of 10 November 2025.
China’s top policy makers ended the 4-day Chinese Communist Party Fourth Plenum on Thursday and released an official communique that includes a major push for technological self-reliance and growing domestic consumption in the next five years.
Hong Kong and China stocks traded higher today, with the Hang Seng Index rebounding 0.7% and on track to post a 3.5% weekly gain, snapping a two-week losing streak.
The outlier in the FX market is the Japanese yen, which remained weak against the greenback. In today’s Asia session, the USD/JPY continues to extend its gains since last Friday, 17 October. It recorded an intraday gain of 0.3% and hit the 153.00 psychological level at the time of writing, just below a major resistance of 154.50.
The current weakness of the yen has been reinforced by a slowdown in the latest print of Japan’s core-core inflation (excluding fresh food and energy) that rose at a slower pace of 3% y/y in September from an increase of 3.3% in August, its softest pace in five months.
Today’s key risk event will be the release of the delayed US CPI data, where the core inflation rate for September is expected to be the same rate as 3.1% printed in August.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil
