Asian shares advanced on Friday with investors optimistic that the US Fed is set to ease back on its rate hikes strategy and positive signs on growth for China.
In the US, the S&P 500 jumped 1.3% and the tech-heavy Nasdaq rose 2% overnight, as traders became increasingly convinced of a peak in the Fed’s interest rates hikes next month as inflation pressures ease and the labour market loosens.
That, along with strong earnings from some of the country’s biggest retailers, lifted the mood in Japan where Tokyo’s benchmark Nikkei share average rallied for a sixth straight session, its longest winning streak since July.
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The Nikkei rose 1.20%, or 336.50 points, to close at 28,493.47, and posted a 3.54% weekly advance, its biggest since November. The broader Topix was ahead 0.54%, or 10.79 points, to 2,018.72.
Fast Retailing was at one point up as much as 9.75%, taking it to its highest since March 2021, and some of Japan’s best-known tech names advanced, with Sony adding 1.68% and Nintendo up 1.82%.
China stocks rose too, led by its semiconductor and resource shares, while the central bank head saying that the country would achieve this year’s growth target also lifted investor sentiment.
China’s economy is likely to grow around 5% this year, People’s Bank of China Governor Yi Gang said in remarks published on Friday, in line with the government’s annual target.
The Shanghai Composite Index rose 0.60%, or 19.79 points, to 3,338.15, while the Shenzhen Composite Index on China’s second exchange advanced 0.44%, or 9.37 points, to 2,137.06.
Tech giants listed in Hong Kong lost 0.7%, with search engine giant Baidu slumping 3% and food delivery firm Meituan dropping 1%. The Hang Seng Index gained 0.46%, or 94.33 points, to 20,438.81.
MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.6%.
Singapore Holds on Rates
Meanwhile, the Monetary Authority of Singapore (MAS) surprised many by leaving policy unchanged, saying the tightening already underway would ensure inflation slowed sharply later this year.
The MAS joined central banks in Canada, Australia and India in putting hikes on hold, while the US Federal Reserve was seen nearer pausing after a soft producer price report.
Futures still imply a 68% chance the Fed will raise rates in May, but then almost zero chance of a further increase and maybe 50 basis points of cuts by year end.
Figures on US retail sales are due later in the session and some analysts are warning the risk is for a downside surprise, which would support the dovish turn.
Eurostoxx 50 futures added 0.3% and FTSE futures 0.2%. S&P 500 futures and Nasdaq futures were steady after sharp gains overnight.
US Dollar Steadies
Investors are now bracing for earnings from Citigroup Inc, Wells Fargo and JPMorgan Chase & Co which could test the bullish mood given recent stress in the sector.
“We will be looking at bank earnings calls to follow discussions around deposits, lending standards, and any adjustments to bank funding that might be planned, including more debt sales,” said analysts at NatWest Markets.
The dollar was relatively steady on the yen at 132.51 yen, supported by the Bank of Japan’s easy policy stance.
Bank of Japan Governor Kazuo Ueda said on Thursday he told his G20 counterparts the central bank will likely keep monetary policy ultra-loose.
All the talk of future US rate cuts has given non-yielding gold a boost, with the yellow metal up at $2,042 an ounce after striking a one-year peak of $2,048.71 overnight, not far from its all-time top of $2,069.89.
Oil prices firmed as planned cuts to output offset warnings from OPEC on summer oil demand in a monthly report. Brent edged up 30 cents to $86.39 a barrel, while US crude rose 37 cents to $82.53 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.20% at 28,493.47 (close)
Hong Kong – Hang Seng Index > UP 0.46% at 20,438.81 (close)
Shanghai – Composite > UP 0.60% at 3,338.15 (close)
London – FTSE 100 > UP 0.27% at 7,864.78 (0934 GMT)
New York – Dow > UP 1.14% at 34,029.69 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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