Asia’s major stock indexes bounced back on Friday, with investors buoyed by the absence of any inflation shock from the US.
Japanese shares hit fresh record highs as a key US prices reading came in as expected, a relief for investors who are looking for a June rate cut, while mixed data from China bolstered hopes for more policy support.
But it was Tokyo hogging the headlines again as its Nikkei share average soared to all-time peaks, as tech-related stocks tracked record-high closings among their US peers after comments from Federal Reserve officials provided cues on the interest rate trajectory.
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The Nikkei ended 1.90% up at a new closing high of 39,910.82, moving past a record intraday peak of 39,426.29 set earlier this week. The index closed the week higher with a 2% jump.
The index had risen as high as 39,990.23, just shy of reaching 40,000 for the first time, as it continues to climb to record peaks after last month breaching the lifetime high set during the December 1989 asset bubble. The broader Topix finished 1.26% higher at 2,709.42.
Trader sentiment was upbeat after the S&P 500 and Nasdaq closed at record highs overnight, supported by technology stocks linked to AI, while US inflation data and comments from Fed officials fuelled bets of an interest rate cut in three months’ time.
Japan’s chip-related shares, which have greatly contributed to the index’s 17% surge this year, also jumped.
China shares gained too, extending a rebound triggered by intensive market support measures as investors await cues of more stimulus from Beijing’s key political gathering next week, while Hong Kong stocks also rose.
Underlining the need for more stimulus, China’s manufacturing activity in February contracted for a fifth straight month.
China Stimulus Forecast
Moody’s Analytics expects more support measures to be announced during the annual gathering of the National People’s Congress that starts on March 5. They include a spending package to aid real estate and manufacturing, and direct handouts to households to boost domestic consumption.
China’s blue-chip CSI300 Index was up 0.62%, having bounced 13% from the five-year lows hit a month ago. The Shanghai Composite Index rose 0.39%, or 11.85 points, to 3,027.02, while the Shenzhen Composite Index on China’s second exchange was up 1.08%, or 18.41 points, to 1,725.39.
Hong Kong’s share benchmark Hang Seng climbed 0.47%, or 78.00 points, to 16,589.44, led by tech stocks.
Elsewhere across the region, in earlier trade, Sydney, Mumbai and Bangkok also rose. Taipei, Jakarta, Manila and Kuala Lumpur were down. Wellington and Singapore were flat, while Seoul was closed for a holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2%, although it was still set for a weekly loss to 0.4%.
Europe was set to open higher, with both Eurostoxx 50 futures up 0.5% and FTSE futures gaining 0.6%. US futures, gained about 0.2%.
Bonds Rally
The US personal consumer expenditures (PCE) price index, the Federal Reserve’s preferred gauge for inflation, rose 0.3% in January from a month earlier. The core PCE price index rose 0.4%, as expected.
That kept the prospects of a June interest rate cut alive. Markets still see a 76% probability the Fed will start cutting interest rates in June, with a total easing of 82 basis points priced in for this year.
Further aiding sentiment, Fed speakers overnight reiterated that policymakers will look through recent data that showed price pressures rebounded in January to focus on overall progress in inflation.
In Europe, inflation readings in Germany, France and Spain all eased, mostly in line with expectations, which should bode well for eurozone inflation data are due later on Friday.
Bonds were steady after rallying in relief that the US PCE data was not worse than expected. The 10-year Treasury yield held at 4.2542% after edging 4 basis points lower overnight. It jumped 29 basis points last week as markets pushed back bets on early rate cuts.
Oil prices edged up on Friday. Brent rose 0.4% to $82.21 a barrel, while US crude gained 0.3% to $78.47 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.90% at 39,910.82 (close)
Hong Kong – Hang Seng Index > UP 0.47% at 16,589.44 (close)
Shanghai – Composite > UP 0.39% at 3,027.02 (close)
London – FTSE 100 > UP 0.75% at 7,687.24 (0937 GMT)
New York – Dow > UP 0.12% at 38,996.39 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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