Global capital is accelerating its embrace of Asian markets, which offer more attractive valuations and resilient growth. Stock markets across the Asia-Pacific region generally moved higher on Friday, with the MSCI Asia Pacific Index posting steady gains. Notably, chip-related stocks were particularly outstanding performers.
Asia-Pacific equities broadly advanced on Friday, with the semiconductor industry chain continuing the enthusiasm from the previous session. Leading stocks, such as Japanese equipment manufacturers and South Korea's Samsung Electronics, recorded strong gains. The MSCI Asia Pacific Index rose by 0.5%, with advancing stocks outnumbering decliners by more than two to one.
(Samsung Electronics rose 1.7%)
Japan's Nikkei 225 Index climbed 0.34%, while Australia's S&P/ASX 200 Index saw an intraday increase of up to 0.45%. Notably, South Korea's KOSPI, which had just historically breached the 5,000-point milestone the previous day, maintained its strong momentum, rallying as much as 1.4% during the session.
(South Korea's KOSPI maintained strength, rising 0.9%)
Analysis suggests that the temporary de-escalation of US-Europe trade war alarms has significantly boosted global investors' risk appetite and accelerated a potential, deeper asset rotation.
Amid concerns over the unpredictability of US policy, capital is gradually flowing out of highly-valued US assets and turning towards Asian markets that feature more attractive valuations and relatively distant geopolitical risks. This rotation is directly leading to a weaker US Dollar and providing strong upward momentum for assets like Asia-Pacific stocks and precious metals.
Mabrouk Chetouane, Global Market Strategist at Natixis IM Solutions, stated:
The geographical distance of the Asian region from geopolitical centers like the US, EU, and Latin America acts as a buffer, allowing investors to diversify their exposure to risk assets.
Notably, market focus in Asia will center on the Bank of Japan's interest rate decision, where it is expected to hold its policy rate steady at 0.75%. Previously, spending expansion plans proposed by Prime Minister Sanae Takaichi had caused financial market turbulence, making the central bank's policy stance subject to close scrutiny.
The US Dollar Index maintained weak consolidation during Asian trading hours after posting its largest one-day decline in a month during the previous session, providing a tailwind for dollar-denominated commodities.
(US Dollar Index weak rebound)
Peter Grant, Senior Metals Strategist at Zaner Metals, said:
In the current macroeconomic environment, gold demand is supported by the trend of a depreciating US Dollar. Short-term pullbacks are likely to be viewed as buying opportunities, and gold is expected to potentially break through $5,000 per ounce, or even higher.
Spot gold prices capitalized on the momentum, breaking through $4,960 per ounce to set another record high during the session. Silver also surged to a record peak, touching the $99 mark.
(Spot silver surged 2.5% in early trading, spot gold rose 0.75%)
Spot platinum gained nearly 2% intraday before retreating to levels near yesterday's closing price.
(Spot platinum surged then pulled back)
Optimistic Outlook for Precious Metals Market
Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, indicated that geopolitical tensions, broad US Dollar weakness, and expectations for Federal Reserve rate cuts this year are all components of a macro de-dollarization trend that continues to influence gold demand.
Markets anticipate the Federal Reserve will implement two 25-basis-point rate cuts in the second half of the year, enhancing the appeal of non-yielding gold.
Meanwhile, spot silver and platinum exhibited even stronger gains. Nikos Tzabouras, Senior Market Analyst at Tradu, noted that the fundamental narrative for silver is far more attractive than that for gold.
He pointed out that while silver may not be a reserve asset like gold, it still benefits from safe-haven fund inflows and US Dollar weakness.
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