Asian Stocks Mixed as Commodities Pause and Yen Draws Attention

• Asian stocks fall 0.2%, HK stocks down 1.1%; Fed rate cut expected October 29.

• Nikkei falls 0.7%; Japan’s wholesale prices rise 2.7%, yen against dollar weakens to 152.96.

• Gold slips to $3,971.93; silver up 1% $65.27 post-Gaza ceasefire.

Asian equity markets struggled to close the week on a weak note Friday, influenced by ongoing losses on Wall Street that extended into early Asian trading. Commodity markets paused after recent impressive gains. Despite the slowdown, regional stocks remain on course for one of the strongest annual performances in a decade, significantly outperforming U.S. markets. This outperformance has been driven by robust demand across Asia, fueled in part by President Donald Trump’s economic policies and tariffs, which have accelerated orders for AI-related technology hardware.

According to Chris Weston, head of research at Pepperstone Group Ltd in Melbourne, a variety of "well-subscribed, high-momentum trades" such as gold, silver, cryptocurrencies, and much of the S&P 500 “have begun to show signs of exhaustion.” MSCI’s broad Asia-Pacific index excluding Japan wavered between gains and losses, finishing 0.2% lower, placing its weekly gains in jeopardy after U.S. equities posted mild losses in the previous session.

Hong Kong stocks dropped sharply by 1.1%, while Australia’s market dipped marginally by 0.1%, amid volatile conditions in commodity prices. Conversely, South Korea’s benchmark index surged 1.7%, extending its lead as the region’s top-performing market. U.S. stock futures stabilized in Asian trading ahead of next week’s crucial third-quarter earnings season on Wall Street. S&P 500 e-mini futures edged up 0.2%. The U.S. dollar index remained steady near a two-month peak at 99.37.

Meanwhile, the yield on the U.S. 10-year Treasury note fell to 4.1384%, down from Thursday’s close of 4.148%. Expectations of a Federal Reserve interest rate cut remain firm, with Fed funds futures assigning a 94.1% chance of a 25-basis-point reduction at the October 29 meeting.

Japan’s Nikkei index retreated 0.7%, stepping back after this week’s strong gains, including a record closing high on Thursday. Earlier economic data showed wholesale prices increased 2.7% in the year ending September, signaling persistent inflationary pressures that could influence the Bank of Japan’s policy decisions at its October 30 meeting.

The Japanese yen edged slightly weaker, slipping 0.1% against the U.S. dollar to 152.96, the lowest level since February. This came after the new ruling party leader, Sanae Takaichi, stated that while the Bank of Japan holds responsibility for monetary policy, its decisions must align with government objectives. Market participants remain cautious, anticipating a potential push by the government to assert greater control over the central bank’s policy, though skepticism remains over how this might reconcile with yen weakness and political realities.

Analysts at Bank of America noted, "The market expects the Japanese government to adopt expansionary fiscal policies. However, considerable uncertainty remains about the specifics of the policies being debated and the extent of fiscal expansion."

Gold prices eased, continuing their decline after ending a four-day rally on Thursday, which included briefly surpassing 4,000 per ounce — a historic milestone. Spot gold was last down 0.1% to $3,971.93 per ounce. Meanwhile, silver rebounded by 1% to $49.62, retesting the 50 level for the second time in two days. Chinese equities fell sharply following overnight losses in large-cap ETFs on Wall Street, triggered by Beijing’s expanded export controls on rare earth materials. The tightened restrictions come ahead of scheduled talks between Presidents Trump and Xi Jinping.

In energy markets, Brent crude rose slightly by 0.1% to $65.27 per barrel. The positive movement came after Israel formally approved a ceasefire deal with Hamas, enabling a suspension of hostilities in Gaza within 24 hours and the anticipated release of Israeli hostages held by the militant group.