Asian stock markets close in positive territory. Tokyo shines: the Nikkei ends up 2.16%, with focus on the Fed and the Trump-Xi meeting

Indices

Major Asian indices are exhibiting strong upward momentum, particularly in Japan, where the Nikkei 225 (^N225) has surged to a new record at 51307.65, marking a daily gain of 2.16744. This move is being fueled by optimism regarding Prime Minister Sanae Takaichi’s anticipated pro-growth economic stimulus, as well as global factors such as a weaker yen and improved U.S.-China trade outlook. The Nikkei 225’s flat short-term micro-trend, however, suggests traders are pausing after the rally, awaiting further policy clarity.

In China, the Hang Seng Index (^HSI) is trading at 26346.14, down -0.33124, with a flat micro-trend. This reflects a cautious tone among Hong Kong investors amid ongoing sectoral rotation and global macro uncertainties. The Shanghai Composite Index has shown resilience, recently closing at a decade-high, driven by robust performances in fintech and technology sectors, especially following policy developments around digital currencies.

While short-term trend signals for both the Nikkei 225 and Hang Seng Index are flat, the underlying price action suggests bullish sentiment in Japan and selective optimism in China, with investors closely monitoring upcoming policy announcements for direction.

Stocks

Sectoral leadership in Japan is currently dominated by technology and innovation-driven companies. Notable gainers include Disco Corp. (TYO:6146) up 7.5 and Sumitomo Metal Mining (TYO:5713) up 6.87, reflecting strong investor appetite for high-growth sectors. Conversely, semiconductor stocks such as Tokyo Electron (TYO:8035) and Advantest Corp. (TYO:6857) have experienced declines of -6.5 and -7.6, respectively, due to sector-specific headwinds linked to global trade friction and shifting demand.

In China, technology and mining stocks lead the way, with Zijin Mining Group (HK:2899) gaining 6.38 and NetEase (HK:9999) up 6.04, signaling renewed interest in resilient growth sectors. Meanwhile, Chinese electric vehicle manufacturers such as Geely Automobile (HK:0175), Li Auto (HK:2015), Nio Inc. (HK:9866), Xpeng (HK:9868), and BYD (HK:1211) have suffered declines between -5 and -9, reflecting ongoing industry price wars and regulatory scrutiny.

This divergence within sectors suggests traders are favoring technology and mining plays while remaining defensive in areas exposed to policy risk and global supply chain disruptions.

Economic News

Recent economic data continues to shape market direction. In Japan, the manufacturing PMI dropped to 48.5 from 49.7, indicating contraction and persistent sectoral headwinds, while the Bank of Japan’s Tankan index for large manufacturers improved to 14, up from 13, suggesting resilience among major corporates. In China, GDP growth remains robust at 5.2, despite concerns about the sustainability of the recovery after some weaker-than-expected holiday data.

Policy developments, such as China’s move to allow yuan-backed stablecoins and open the stock options market to foreign investors, as well as Japan’s anticipated economic stimulus, have further bolstered medium-term optimism.

Economic Events

Key economic events shaping the outlook include the National People’s Congress in China starting October 8, which is expected to provide guidance on policy support, and the upcoming Bank of Japan policy meeting at the month’s end. Additionally, major Japanese macro releases—household spending, leading economic indicators, and current account data—are on the radar for signs of momentum shifts in consumption and production.

In China, the ongoing Communist Party leadership meetings and the upcoming Fourth Plenary Session of the 20th Central Committee are likely to clarify future economic reforms and financial strategies.

Market Sentiment

Market sentiment across Asia is notably bullish, particularly in Japan, where the Nikkei 225’s surge reflects optimism about pro-growth leadership and anticipated fiscal stimulus. However, the prevailing flat micro-trend signals in both the Nikkei 225 and Hang Seng Index point to an underlying wait-and-see attitude, with investors seeking confirmation from upcoming policy releases and economic events. In China, selective sectoral optimism is countered by caution in areas exposed to regulatory interventions and questions about the durability of economic growth. This sentiment is driving a preference for high-growth and technology themes while maintaining defensiveness in more vulnerable sectors.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.