Asian equities kicked off Tuesday, October 21, on a powerful upswing, reflecting improved global investor sentiment and positive signals from Wall Street overnight. The broad-based rally across the region underscores growing confidence in corporate earnings momentum and macroeconomic stability heading into the final quarter of 2025.

Japan Takes the Lead in Regional Gains

Japan’s Nikkei 225 surged 3.37% to 49,185.50 in early trading, leading Asian markets as investor confidence returned to growth sectors, particularly technology and manufacturing. The rally came despite a slight dip in the Japanese Yen Index, which fell 0.05% to 66.36 — a move that supports export-oriented companies by boosting profit margins when overseas earnings are repatriated.

The strong performance followed a wave of optimism in U.S. markets and expectations that the Bank of Japan will maintain its supportive monetary stance to encourage domestic growth. Analysts note that corporate earnings forecasts remain resilient, with several large-cap tech firms expected to post solid third-quarter results later this week.

China, Hong Kong, and South Korea Show Momentum

In Greater China, investor sentiment strengthened as the Hang Seng Index gained 2.42% to 25,858.83, supported by a rebound in property developers and technology stocks. Mainland China’s SSE Composite Index climbed 0.63% to 3,863.89, indicating cautious optimism among traders awaiting fresh policy announcements from Beijing.

Meanwhile, South Korea’s KOSPI Composite Index rose 1.76% to 3,814.69, fueled by semiconductor and electric vehicle component makers. Investors there remain encouraged by global demand recovery signs and improving export figures. Market strategists also pointed to stronger foreign fund inflows into South Korean equities, driven by expectations of a stable won and better-than-expected industrial output.

Australia Steady, India Trades Shorter on Diwali

Australia’s S&P/ASX 200 [XJO] added 0.41% to 9,031.90, buoyed by gains in mining and energy sectors. The Australian Dollar Index rose 0.31% to 65.13, reflecting continued resilience in commodity-linked currencies as global trade expectations improve. Investors in Sydney remain focused on upcoming inflation and employment reports, which could influence the Reserve Bank of Australia’s next rate decision.

In India, the S&P BSE SENSEX edged up 0.49% to 84,363.37 before the National Stock Exchange’s early close at 09:15, marking the celebration of Diwali – Laxmi Puja. The shortened session saw steady trading volumes, suggesting investors remain confident in India’s robust economic outlook despite global uncertainties.

Regional Currency Moves and Broader Sentiment

Currencies across the region stayed largely stable, with modest gains in the Australian dollar offsetting minor weakness in the yen. The stability reflects investor caution ahead of upcoming U.S. and European inflation reports that could impact Asian export competitiveness.

Market analysts emphasized that today’s rally points to renewed investor conviction in Asia’s medium-term growth potential. Many traders are rotating back into equity positions, particularly in cyclical and technology sectors, as inflation risks ease and policy clarity improves.

Looking ahead, investors will monitor central bank commentary, corporate earnings updates, and geopolitical developments that could shape sentiment in the coming sessions. Sustained foreign inflows and stable currency movements could support further gains across Asia. However, risks remain tied to potential volatility in global bond yields, energy price fluctuations, and policy shifts in major economies. Traders will be watching closely to see if Tuesday’s surge sets the tone for a broader regional uptrend through the end of October.