Asian stocks were back on the front foot on Friday, buoyed by strong corporate earnings across the board.
Upbeat results from bellwether tech firms, including Meta Platforms Inc, Microsoft Corp and Alphabet Inc helped lift US stocks higher and this optimism lifted Asian investors too.
Japan’s Nikkei share average rose to an eight-month high after the Bank of Japan left its ultra-easy monetary policy settings unchanged, adding to the boost from a series of strong domestic earnings.
The Nikkei surged as high as 28,879.24 for the first time since August 19, and closed near that level at 28,856.44, a gain of 1.40%. The broader Topix ended 1.23% higher at 2,057.48, the strongest level since March 9.
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The yen slumped as much as 0.83% to just past 135 per dollar, giving support to Japanese exporters’ shares, particularly automakers.
Bank stocks, though, were a casualty of the BoJ decision, flipping from gains of as much as 2.64% in the morning to losses as steep as 2.41% on the idea that low rates will continue to crush lending profits for the foreseeable future.
As widely expected, the BoJ kept its short-term interest rate target intact at -0.1% and for the 10-year bond yield around 0%, vowing to “patiently” continue with stimulus.
China stocks rose on Friday ahead of the May Day holiday, with media, financials, and consumer shares leading the gains amid positive recovery signs and strong earnings.
“Investor sentiment stabilised somewhat as consumption recovery stays on track and concerns over Covid-19 resurgence lessen,” Morgan Stanley said in a note.
The brokerage also said the sentiment could incrementally improve further if there is positive holiday data, more signs of corporate earnings revisions bottoming out, and US-China relations stabilising with signs of direct communication channels being re-established.
China Media Shares Leap
The Shanghai Composite Index rose 1.14%, or 37.39 points, to 3,323.27, while the Shenzhen Composite Index on China’s second exchange gained 1.41%, or 28.57 points, to 2,056.04.
Media stocks jumped more than 8% following corrections in the previous two sessions, amid frenzy around Chinese equivalents of OpenAI’s ChatGPT chatbot, where analysts had warned of risks of bubble.
Tech giants listed in Hong Kong rose 1.4% with the benchmark Hang Seng Index gaining 0.27%, or 54.29 points, to close at 19,894.57.
Elsewhere across the region, Seoul, Sydney, Taipei, Wellington, Mumbai, Bangkok and Manila were all up, while Jakarta, Singapore and Kuala Lumpur were down.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.51% higher but remained on course to end the month lower.
US Economy Slowing
Futures indicated European stocks were set to open higher, with Eurostoxx 50 futures up 0.44%, German DAX futures up 0.36% and FTSE futures up 0.35%.
E-mini futures for the S&P 500 eased 0.11% after Amazon.com Inc signalled its cloud growth would slow further as its business customers braced for turbulence and clamped down on spending.
Data overnight showed the US economy slowed more than expected in the first quarter, even as price growth came in hotter than economists had projected.
The core PCE price index, one of the measures of inflation tracked by the Federal Reserve, jumped at a 4.9% rate after advancing at a 4.4% pace in the prior quarter.
Data also showed that initial claims for unemployment benefits fell, suggesting ongoing tightness in the labour market, a major driver of inflation.
US Dollar Index Up
Markets are pricing in an 85% chance of the Fed raising interest rates by 25 basis points at its meeting next week, the CME FedWatch tool showed. Traders expect the hike to be the last in the US central bank’s fastest monetary policy tightening cycle since the 1980s.
The yield on 10-year Treasury notes eased 2.3 basis points to 3.505%, after clocking their biggest intraday gain since March on Thursday as investors weighed the looming debt ceiling showdown in Washington.
The yield on the 30-year Treasury bond was down 1.9 basis points to 3.738%.
The dollar index, which measures the currency against six rivals, was 0.217% higher, with the euro down 0.12% to $1.1014.
US crude rose 0.52% to $75.15 per barrel and Brent was at $78.90, up 0.68% on the day.
Key figures
Tokyo – Nikkei 225 > UP 1.40% at 28,856.44 (close)
Hong Kong – Hang Seng Index > UP 0.27% at 19,894.57 (close)
Shanghai – Composite > UP 1.14% at 3,323.27 (close)
London – FTSE 100 < DOWN 0.42% at 7,798.93 (0939 GMT)
New York – Dow > UP 1.57% at 33,826.16 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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