Asian equities extended Wall Street’s overnight rally on Thursday, boosted by strong corporate earnings and a continued frenzy around artificial intelligence. Japan’s Nikkei rose 0.8%, while South Korea’s KOSPI and Taiwan’s benchmark jumped to lifetime highs. The global chip sector surged after ASML reported stronger-than-expected results, with investors awaiting Taiwan’s TSMC earnings later in the day.
However, the upbeat sentiment was tempered by escalating U.S.-China trade frictions. U.S. President Donald Trump declared the countries “in a trade war,” as Washington prepares a 100% tariff hike by November 1. Beijing’s potential retaliation through rare earth export curbs has kept traders on edge.
Why It Matters:
The clash between the world’s two largest economies is reshaping global investor behavior. Safe-haven assets like gold which soared 0.6% to an all-time high of $4,234.41 per ounce and the Japanese yen are seeing renewed demand. Meanwhile, the dollar weakened for the third consecutive session, highlighting investor anxiety over trade uncertainty. Markets are now weighing whether the AI boom and solid U.S. corporate earnings can offset the geopolitical drag from Washington’s protectionist stance.
Investors and Tech Firms: Benefiting from AI-fueled optimism, but vulnerable to supply chain disruptions if trade tensions escalate.
Asian Export Economies: Japan, Taiwan, and South Korea’s chip-heavy markets are thriving now, but remain exposed to U.S.-China tariff shifts.
U.S. and Chinese Policymakers: Engaged in brinkmanship that risks global economic stability.
Energy Markets: Brent and WTI rose nearly 1% after Trump said India will halt Russian oil imports a move that could tighten global supply and pressure China to follow suit.
Future Outlook:
Markets will stay volatile as investors watch for a potential Trump–Xi meeting later this month in South Korea, which could offer a diplomatic off-ramp. Yet, analysts warn that lasting calm will only return if Washington withdraws its planned tariff hikes and Beijing tones down its rare earth threats. Until then, Asia’s stock rally may coexist uneasily with gold’s record-breaking climb a vivid symbol of optimism and fear sharing the same global stage.
With information from Reuters.
