TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Asian stocks surge ahead of BOJ policy decision
Change Size
A security officer patrols around the Bank of Japan (BoJ) headquarters in Tokyo on Feb. 14, 2023. (AFP/Yuichi Yamazaki)
A
sian stocks rallied on Friday as strong corporate earnings helped lift sentiment even as worries over economic weakness lingered, while investors were also waiting on a policy decision from the Bank of Japan.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.94 percent higher but remained on course to end the month 1.4 percent lower. Japan's Nikkei rose 0.51 percent, while Australia's S&P/ASX 200 index gained 0.33 percent.
US stocks closed sharply higher on Thursday thanks to upbeat results from bellwether tech firms, with Meta Platforms Inc, Microsoft Corp and Alphabet Inc soaring after reporting results.
China shares eased, while Hong Kong's Hang Seng index was 0.5 percent higher. Geopolitical tensions along with worries over the global economic outlook have crimped investor sentiment in recent weeks.
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.
Taylor Nugent, an economist at National Australia Bank, said the data showed "an unhappy combination" of softer-than-expected growth and stronger-than-expected prices increases in first quarter.
The core PCE data, one of the measures of inflation tracked by the Federal Reserve, caught markets' attention, Nugent said. The core PCE price index jumped at a 4.9 percent rate after advancing at a 4.4 percent 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.
"Stubborn inflation data gives the Fed little breathing room to take heed of nascent slowing in activity and the labour market should it continue to develop," Nugent said.
Markets are pricing in an 85 percent 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.
Ahead of that, however, investor attention on Friday will be squarely on Japan's new central bank governor Kazuo Ueda at his debut policy meeting.
At the meeting Ueda chairs just three weeks into his term, the central bank is widely expected to maintain its short-term interest rate target of -0.1 percent and a pledge to guide the 10-year bond yield around zero.
Investors have dialled down wagers on a policy shift, opening a window of calm that ironically affords governor Ueda a chance to move quickly.
The Nikkei newspaper reported that the BOJ will discuss on Friday conducting a comprehensive examination of its past monetary easing steps and revise its guidance on the future policy path.
Core consumer prices in Japan's capital, Tokyo, rose 3.5 percent in April from a year earlier, government data showed on Friday.
"While no policy change is expected, the focus will be on the outlook/guidance and any potential review of the central bank's longer-term performance and monetary policy settings," said ActivTrades market analyst Anderson Alves.
The yield on 10-year Treasury notes was down 0.8 basis points to 3.520 percent, 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 at 3.754 percent in Asian hours.
The currency market was a bit subdued ahead of policy decisions. The dollar index, which measures the currency against six rivals, rose 0.02 percent, with the euro up 0.03 percent to $1.103.
The Japanese yen weakened 0.03 percent to 133.99 per dollar. Sterling was last trading at $1.2495, up 0.06 percent on the day.
US crude was off 0.01 percent to $74.75 per barrel and Brent was at $78.23, down 0.18 percent on the day.
Spot gold dropped 0.1 percent to $1,985.39 an ounce. US gold futures fell 0.15 percent to $1,986.90 an ounce.
