On Friday, Asia-Pacific stocks followed overnight gains in U.S. markets, with the Nikkei 225 rising over 1% and the MSCI Asia-Pacific Index up 0.6%. U.S. stock futures were mixed, with Dow futures down 0.26% while Nasdaq 100 futures edged up 0.1%. Cooling U.S. inflation data reinforced expectations of Fed rate cuts, lifting sentiment after the S&P 500 gained 0.8% and the Nasdaq 100 surged 1.5% on Thursday.
The Bank of Japan (BOJ) hiked rates by 25 basis points, raising its benchmark rate to the highest level in 30 years and signaling further tightening if conditions permit. This pushed the 10-year Japanese Government Bond (JGB) yield above 2% for the first time since 2006, with 30-year and 40-year yields also climbing. However, the yen weakened against all G10 currencies as markets viewed the BOJ’s pace of hikes as cautious.
Commodities mostly faced pressure. Spot gold fell 0.1% below $4,330, weighed down by softer U.S. inflation and a stronger dollar. Platinum and palladium retreated after Thursday’s rally, while silver rose 0.4%, nearing $66. Oil prices declined amid persistent oversupply concerns, with both Brent and WTI crude dipping.
**Key Market Moves**: - S&P 500 futures flat; Nasdaq 100 futures up 0.1% - Nikkei 225 rose 1.25%; Topix gained 0.7%; Australia’s ASX 200 up 0.5% - Euro Stoxx 50 futures down 0.3% - Dollar index steady; yen fell 0.3% to ¥155.92 per dollar - 10-year U.S. Treasury yield up 2 bps to 4.14% - 10-year JGB yield rose 3 bps to 2.000%; 30-year JGB up 4 bps to 3.415%; 40-year JGB up 3.5 bps to 3.71% - WTI crude down 0.3% to $55.81/barrel; Brent down 0.3% to $59.32 - Spot gold at $4,328.08/oz; silver up 0.7% to $65.97/oz - Bitcoin rose 1.6% to $86,994.64; Ethereum up 3.3% to $2,920.90
**U.S. Inflation Cool-Off Boosts Markets** Asia-Pacific stocks rallied, led by tech giants like SoftBank Group and Tencent Holding. Overnight U.S. gains were fueled by cooling inflation data, which bolstered Fed rate-cut bets, alongside a tech rebound driven by Micron Technology’s robust outlook, easing AI-related valuation concerns.
U.S. November CPI rose 2.7% YoY, below forecasts of 3.1% and the slowest pace since early 2021, lifting investor confidence and supporting Treasuries amid dovish Fed expectations.
Chris Zaccarelli, CIO of Northlight Asset Management, noted: *"With inflation slowing markedly, there’s room for further cuts to support the labor market. A dovish Fed could sustain equity gains."*
However, data distortions due to the October government shutdown may have impacted the figures, cautioned economists like Krishna Guha of Evercore ISI.
**BOJ’s Hike Cycle: Yen Weakens, JGB Yields Surge** The BOJ unanimously raised rates to 0.75%, its highest since the 1990s, while signaling more hikes if economic conditions align. Despite the move, rates remain below inflation.
Harumi Taguchi of S&P Global Market Intelligence called the hike overdue, adding: *"The BOJ’s stance is unchanged—further hikes are likely if trends hold."*
Post-announcement, the yen weakened to ¥156.16/$, while 10-year JGB yields hit 2% for the first time since 2006. The Nikkei 225 closed up 0.9%.
ANZ strategist Felix Ryan noted: *"The yen may lag G10 peers as rate differentials persist."*
**Commodities Under Pressure** Gold dipped as softer inflation reduced its hedge appeal, though it posted a 0.4% weekly gain. Silver rose 0.4% toward $66, up 5% this week and 125% YTD, outperforming gold.
KCM Trade’s Tim Waterer said: *"Milder inflation is a double-edged sword—supportive for Fed doves but dampening demand for hedges."*
Platinum rose 0.5% to ~$1,925 after a 17-year high, while palladium fell 1.1%. Oil extended losses for a second week despite geopolitical tensions, with Brent down over 2%.
Comments