Asian stock markets finished Friday's trading session on a positive note, buoyed by encouraging economic data from the United States and robust corporate earnings from a major technology firm. The rally offered a welcome respite at the end of a challenging week for global equities.
US Inflation Data Fuels Rate Cut Optimism
The primary catalyst for the uptick was a report showing that US inflation slowed in November to its lowest level since July. The figure came in well below analyst forecasts, reigniting investor hopes that the Federal Reserve could implement another interest rate cut as soon as next month. This data provided a sliver of optimism after traders had recently scaled back their expectations following the Fed's last policy meeting.
However, some analysts urged caution. Economists at Bank of America highlighted potential "shutdown-related distortions" in the data, referring to the lengthy US government closure that ended in mid-November. They recommended taking the report "with a large grain of salt." Despite these caveats, the news was enough to lift all three major indexes on Wall Street, setting a positive tone for Asian trading.
Micron's Blockbuster Earnings Calm Tech Sector Jitters
Another significant factor supporting market sentiment was an outstanding earnings report from American chipmaker Micron Technology. The company announced that its quarterly profits had nearly tripled to $5.2 billion, a direct benefit from the ongoing artificial intelligence (AI) boom. Micron also provided an upbeat forecast for the current quarter.
This performance helped soothe growing investor anxiety about a potential bubble in the high-flying technology sector. Speculation had been mounting that the sector, which has driven global equity markets to record highs this year, might be due for a sharp correction. Micron's results offered tangible evidence of strong underlying demand and profitability.
Bank of Japan Takes Center Stage
Investors in Asia were also closely monitoring the Bank of Japan (BoJ) as it concluded its latest policy meeting. There was widespread expectation that the Japanese central bank would lift interest rates to a 30-year high later in the day. This decision follows a report showing the country's inflation rate held steady at 3% in November.
The move comes amid concerns over Prime Minister Sanae Takaichi's budget discipline and a weakening yen. Takaichi, who took office in October, has pledged to combat inflation as a top priority. Market observers anticipate the yen could strengthen as the BoJ raises rates while the Fed potentially cuts them later in the year.
Fabien Yip, a market analyst at IG, noted: "As the BoJ proceeds with measured rate increases while the Fed implements one to two cuts, the yield gap that has long supported dollar strength will continue tightening. This convergence should exert sustained downward pressure on the dollar-yen pair throughout the year."
By the close of the morning session in Asia, key indices reflected the optimistic mood:
- Tokyo's Nikkei 225 was up 1.2 percent at 49,568.66.
- Hong Kong's Hang Seng Index gained 0.7 percent.
- Shanghai Composite rose by 0.5 percent.
- Markets in Sydney, Seoul, Singapore, Taipei, and Wellington also posted gains.
In currency markets, the yen was little changed against the dollar, trading at 155.74. Oil prices saw a slight dip, with Brent North Sea Crude down 0.2 percent at $59.69 per barrel.
