Asian markets advanced on Thursday, extending Wall Street’s overnight rally as strong corporate earnings and encouraging economic updates bolstered investor confidence. Gains across major benchmarks in Tokyo, Seoul, and Hong Kong signaled renewed optimism after a volatile start to the week driven by mixed inflation data and concerns over U.S. monetary policy.

While the rally was broad-based, traders remained attentive to shifting signals from the Federal Reserve and geopolitical developments, particularly the ongoing debate around U.S. tariffs and slowing labor market momentum.

Asia Follows Wall Street’s Lead

Japan’s Nikkei 225 climbed 1.5% to close at 50,959.14, boosted by a rebound in technology and industrial shares. Auto giant Nissan Motor Co. rose 1.3% after announcing plans to sell its Yokohama headquarters to raise liquidity ahead of its earnings release later in the day.

South Korea’s Kospi added 1.2% to 4,054.15, supported by gains in semiconductor and financial stocks, while Taiwan’s Taiex rose 0.7%. In China, the Shanghai Composite advanced 0.9% to 4,004.25, and Hong Kong’s Hang Seng Index surged 1.6% to 26,361.40, rebounding from earlier losses this week.

However, the debut of autonomous driving firms Pony.ai and WeRide on the Hong Kong exchange weighed on sentiment in the tech sector. Pony.ai shares tumbled 13%, while WeRide slumped 13.7%, as investors expressed concerns over valuations and the companies’ long-term profitability amid regulatory uncertainties in the U.S. and China.

Wall Street’s Optimism Ripples Across Markets

Wall Street staged a recovery Wednesday, with all major U.S. indices posting gains after a wave of better-than-expected earnings reports. The S&P 500 rose 0.4% to 6,796.29, the Dow Jones Industrial Average gained 0.5% to 47,311, and the Nasdaq Composite added 0.6% to 23,499.80.

Tech giants led the charge — Alphabet jumped 2.4%, Broadcom rose 2%, and Meta Platforms gained 1.4%, helping offset declines in Nvidia and Microsoft. The results from these market leaders underscored the resilience of corporate America despite rising borrowing costs and global uncertainty.

Corporate earnings from consumer and industrial names also added momentum. McDonald’s advanced 2.2% after reporting sales growth fueled by the return of its popular Snack Wraps, while International Flavors & Fragrances surged 4.1% after beating profit forecasts. Conversely, Axon Enterprise and Live Nation Entertainment fell sharply after disappointing investors with weaker guidance and results.

Economic Data Provides Mixed Signals

A lack of government data due to the ongoing shutdown has made private reports crucial for investors gauging economic health. The ADP employment report showed stronger-than-expected private payroll growth in October, suggesting some resilience in the labor market despite broader signs of weakness.

However, concerns linger about slowing job creation and its implications for monetary policy. The Federal Reserve recently cut interest rates for the second time this year to stimulate growth, but officials, including Chair Jerome Powell, have voiced caution about cutting too aggressively while inflation remains above the 2% target.

Consumer prices rose 3% in September, highlighting the central bank’s delicate balancing act between supporting employment and curbing inflationary pressures. “The mix of a weaker job market and hot inflation leaves the Fed in a tough position,” said David Waller, an economist at Horizon Analytics.

Meanwhile, geopolitical risks continue to cast a shadow. President Donald Trump’s expansive tariff program remains a focal point, with the U.S. Supreme Court currently reviewing its legality. The uncertainty surrounding trade policy has added complexity to market forecasts, particularly for global manufacturers and exporters.

Commodities and Currencies Edge Higher

Oil prices edged higher as investors awaited U.S. inventory data and monitored OPEC+ supply dynamics. West Texas Intermediate gained 26 cents to $59.86 per barrel, while Brent crude added 25 cents to $63.77.

In currency markets, the U.S. dollar weakened slightly to ¥153.85 from ¥154.11, while the euro firmed to $1.1510.

Outlook: Balancing Caution and Optimism

With earnings season continuing and fresh economic data expected from Asia and Europe later this week, markets are likely to remain sensitive to shifts in sentiment. The near-term focus will be on how the Federal Reserve navigates its policy stance and whether U.S. trade policies see renewed momentum following the Supreme Court review.

For investors, the rally in Asian shares offers a sign of stabilizing sentiment — but the interplay between growth, inflation, and policy uncertainty will dictate whether the recovery has staying power in the weeks ahead.