On October 21, 2025, Asian stock markets rallied on Tuesday as a result of the easing of trade tensions between the US and China, political stability in Japan, and positive geo-economic news between the US and South Korea, and the US and Australia. Several key indices hit historic highs.
By 11:00 Taipei time, Japan’s Nikkei 225 Index surged to 49,929.81 points, up 1.51%, approaching the significant milestone of 50,000 points. South Korea’s KOSPI Index stood at 3,864.62 points, rising by 1.31%, marking the sixth consecutive trading day of reaching new highs.
Hong Kong’s Hang Seng Index jumped by 1.87% to 26,343.33 points. The Shanghai Composite Index rose by 0.90% to 3,898.54 points. Taiwan’s weighted index also climbed by 0.75% to 27,897.66 points, setting a new record high.
Australia’s rare earth and key mineral sectors strengthened due to the US-Australia supply agreement. The Australian S&P/ASX200 Index rose by 0.80% to 9,104.60 points.
The strong surge in the Japanese stock market was driven by domestic political clarity. With support from the Nippon Ishin no Kai party, LDP leader Sanae Takaichi is set to become Japan’s first female prime minister, with parliament expected to officially confirm her in this afternoon’s nomination vote.
Takaichi is seen as a “fiscal dove,” inclined towards implementing aggressive fiscal stimulus plans and financial easing, which is a significant positive for Japanese stocks but puts pressure on the Japanese yen, which weakened against the US dollar to 150.61.
The broader Asia-Pacific market was mainly encouraged by the easing tensions between the US and China. US President Trump stated that he expects to reach a “fair” trade deal with Chinese leader Xi Jinping, downplaying the possibility of conflict in the Taiwan Strait.
Next week, South Korea will host the Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit, with investors closely watching for the potential “Trump-Xi meeting” during the summit to advance US-China negotiations.
The continuous rise in the Korean stock market began with earlier optimistic signals. US Treasury Secretary Scott Bessent mentioned that the US-Korea trade negotiations are “about to be completed.” This boost has fueled the strength of South Korean auto stocks, such as Hyundai Motor and Kia Corporation, as well as large-cap stocks like Samsung Electronics.
Geopolitical and economic cooperation has become a market highlight. On Monday, President Trump held his first summit with Australian Prime Minister Anthony Albanese at the White House, signing a crucial minerals agreement to enhance supply chains and energy strategic cooperation between the two countries to counter China’s global monopoly on rare earths and key minerals.
The agreement boosted Australian mining company stocks, with Lynas Rare Earths surging by 3.8%, Iluka Resources up nearly 6%, Pilbara Minerals rising by 4.7%. Meanwhile, VHM soared by over 30%, and Northern Minerals surged by almost 15%.
Driven by this, the Australian S&P/ASX 200 Index rose by 0.80%.
Overall, global investors have shown a strong risk appetite, with funds flowing into risky assets, overlooking negative factors such as last week’s US regional bank lending risks and government shutdown. The market anticipates a rate cut by the US Federal Reserve at its upcoming meetings, focusing on the easing of trade tensions and corporate earnings.