Midday Market Performance in Asia

Overview:

Asian currencies remained subdued on Friday as mixed U.S. economic data solidified expectations of fewer interest rate cuts. Regional stock markets, however, performed well, buoyed by gains in South Korea and Taiwan due to upbeat global tech earnings.

Currencies and Foreign Exchange

1. Emerging Markets: 

Emerging market currencies rebounded slightly this week, recovering from earlier losses due to Middle East tensions.

2. US Data Impact: 

The broad MSCI emerging markets currency index showed a 0.2% increase for the week, rebounding from previous declines.

3. Japanese Yen:

The yen hit a fresh 34-year low after the Bank of Japan held rates steady without providing clear future rate guidance.

4. Regional Currencies:

The South Korean won, ringgit, and rupiah experienced varying levels of change, with the rupiah receiving support from a surprise quarter-point rate hike by Indonesia's central bank.

Stocks

1. Technology Boost: 

Positive quarterly earnings from U.S. tech giants Alphabet and Microsoft supported tech-heavy South Korean and Taiwanese markets, which saw notable gains.

2. Regional Performance:

Singapore stocks remained largely unchanged but are set for their best week since January 2021. Thai stocks remained flat but were on track for their best week since August 2023.

Insights and Outlook

Central banks in Asia may not react uniformly to exchange rate movements with rate hikes. For instance, the Philippine finance minister indicated no immediate plans for rate hikes despite the peso's ongoing weakness against the dollar. Meanwhile, markets continue to respond positively to global tech earnings, a trend that may persist in the coming weeks.

Conclusion

Asian markets are showing signs of resilience, with regional currencies recovering and stocks bolstered by strong tech earnings. While the economic data from the U.S. may temper rate cut expectations, the overall outlook for the region remains cautiously optimistic. Markets may continue to be driven by global tech trends and central bank decisions in the coming weeks.

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