Asian markets surged on Friday, buoyed by an overnight rally on Wall Street prompted by dovish signals from central banks. Investors are now eagerly awaiting the release of US jobs data later today.
Japan’s Nikkei 225 climbed 0.86%, while the Topix index advanced 0.4%. South Korea’s Kospi posted strong gains of 1.3%, with the Kosdaq index also rising by 0.49%. Hong Kong’s Hang Seng index surged 1.35%, while China’s CSI 300 edged up by 0.14%.
The upbeat sentiment in Asian markets mirrored the overnight performance of the S&P 500 Index, which reached a record high on Thursday, and the Nasdaq 100, which rose by 1.6%. However, US futures were slightly lower in early Asian trading.
According to Bloomberg, the yen experienced a rise fueled by speculation that the Bank of Japan (BOJ) is considering tightening its monetary policy. The Japanese currency continued its upward trajectory against the US dollar, reaching its highest level since early February. This comes after it ended Thursday with a 0.9% gain, driven by expectations that the BOJ might increase interest rates for the first time since 2007.
Reports suggest that anticipation for the BOJ’s March 18-19 meeting is growing, with some officials within the bank advocating for an early policy shift. Additionally, certain government officials are also reportedly in favor of a rate hike.
Meanwhile, in the United States, Federal Reserve Chair Jerome Powell indicated during a Senate committee session on Thursday that the central bank is nearing confidence in its ability to ease policy. Powell stated that rate cuts could begin this year and emphasized the importance of not delaying policy adjustments, noting the potential risks associated with waiting too long.
Cleveland Fed President Loretta Mester suggested that the central bank could initiate interest rate cuts later this year if inflation continues to decrease. This sentiment aligns with remarks made by European Central Bank (ECB) President Christine Lagarde, who hinted at the possibility of policy easing in June.
The market responded to these statements, leading to a decline in Treasury yields across the curve on Thursday. However, the 30-year yield remained relatively unchanged during the session. Concurrently, the dollar index extended its decline on Friday, weakening against most major currencies.
These positive signals from central banks emerged just ahead of Friday’s highly anticipated US jobs report.
In the commodities market, oil prices rebounded after a previous session’s decline, as traders assessed the implications of potential interest rate changes and geopolitical tensions in the Middle East.