HONG KONG — Asian stock markets experienced gains on Friday following a notable increase in U.S. stock prices, which reached record highs, and the decision by the Bank of Japan to increase its key borrowing rate.
Futures in the U.S. took a slight dip, and oil prices decreased after President Donald Trump urged oil-producing nations to lower crude oil prices, a move aimed at alleviating inflation concerns.
Markets did not respond significantly to Trump’s latest remarks regarding potential hikes in tariffs on imports from China and other nations.
In Japan, the Nikkei 225 index witnessed a minor decline of nearly 0.1%, settling at 39,931.98, following the central bank’s decision to raise its benchmark interest rate to approximately 0.5% from the previous 0.25%. This marks the highest interest rate since 2008, indicating a shift away from previously maintained ultra-low rates aimed at encouraging more borrowing and spending.
A stronger yen usually results in lower profits for companies when their foreign earnings are converted back to yen. Consequently, shares of export manufacturers fell as the value of the U.S. dollar slipped against the yen, trading at 155.40 yen compared to 156.06 yen earlier. Notable declines included Toyota Motor Corp. down by 1.5%, Nissan Motor Corp. which dropped by 2.5%, and Honda Motor Co. that saw a decrease of 0.8%.
Prior to the Bank of Japan’s announcement, government data indicated that core inflation rose to 3% year-on-year in December, the highest in 16 months, surpassing the central bank’s target of 2%.
In Hong Kong, the Hang Seng index climbed by 1.9% to reach 20,063.53, while the Shanghai Composite index appreciated by 0.7% to 3,252.63. Meanwhile, South Korea’s Kospi index gained 0.9% closing at 2,536.80, and Australia’s S&P/ASX 200 saw an uptick of 0.4% to finish at 8,408.90.
On Thursday, the S&P 500 surged by 0.5% reaching 6,118.71, surpassing the prior record established early last month, marking the seventh gain out of eight days for this key indicator. The Dow Jones Industrial Average increased by 0.9% to close at 44,565.07, and the Nasdaq composite saw a rise of 0.2%, ending at 20,053.68.
These gains occurred against a backdrop of relatively stable Treasury yields in the U.S. bond market, which has faced volatility recently due to inflation concerns and high levels of U.S. debt.
Yields on Treasury bonds briefly increased after President Trump discussed potential tariffs during a video speech at the World Economic Forum, stating products made outside the U.S. would be subject to tariffs; however, they receded following a lack of detailed information.
The yield on the 10-year Treasury note rose to 4.64% from 4.61%, although it remains below earlier highs this month. In contrast, the yield on the two-year Treasury slightly decreased to 4.29% from 4.30%.
Earlier reports indicated a modest increase in the number of U.S. workers applying for unemployment benefits, exceeding economists’ expectations. However, experts noted that these figures remained within the minor range observed in recent months. Chris Larkin, managing director at E-Trade from Morgan Stanley, emphasized that employment statistics continue to reflect the strong performance of the U.S. economy.
Market analysts do not anticipate this report to lead to a rate cut from the Federal Reserve in its upcoming meeting next week. If this prediction holds true, it would mark the first meeting since September where the Fed has not lowered the federal funds rate, which could impact investment prices and inflation rates.
In the cryptocurrency market, where optimism has surged over potential favorable policies from Washington regarding digital currencies, bitcoin saw a decline, dropping below $103,000 after reaching a record above $109,000 earlier this week.
In additional early trading on Friday, U.S. benchmark crude oil prices fell by 4 cents to $74.58 per barrel, while Brent crude, the international benchmark, also lost 4 cents, trading at $78.25 per barrel.
The euro appreciated against the dollar, rising to $1.0458, up from $1.0416.
