Asian shares continued their rally on Friday, buoyed by the momentum from a significant interest rate cut in the United States. Meanwhile, the yen edged higher after the Bank of Japan held interest rates steady and maintained an optimistic outlook on the economy.
Japan’s Nikkei share average trimmed early gains due to a stronger yen, following the Bank of Japan’s decision to keep rates unchanged as expected, while also upgrading its view on consumer spending. The Nikkei rose 1.8% to 37,834.09 in early afternoon trading, after gaining 2.1% before the midday break.
The yen strengthened by 0.3% against the dollar, reaching 142.16 as of 3:36 BST, after initially showing little reaction to the Bank of Japan’s policy announcement during the stock and bond market break. Benchmark 10-year Japanese government bond futures fell 0.08 yen to 144.58 yen, with cash bonds yet to trade following the BOJ’s announcement.
In China, the central bank kept its benchmark lending rates unchanged, defying expectations of a cut. Chinese shares underperformed the region, with blue-chip stocks slipping 0.3%. The onshore yuan strengthened to its highest level in nearly 16 months, prompting intervention by state banks to curb its rapid appreciation.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.7%, reaching a two-month high, tracking gains from Wall Street overnight. The index was on track for a weekly gain of 2.5%.
In the U.S., Wall Street stocks surged to new records as investors welcomed the Federal Reserve’s aggressive interest rate cut aimed at protecting the labor market. The Dow Jones Industrial Average rose 1.3% to close at 42,025.19, its first close above 42,000. The S&P 500 also hit an all-time high, jumping 1.7% to 5,713.64, while the tech-heavy Nasdaq Composite soared 2.5% to 18,013.98.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note increased slightly to 3.72% from 3.70% on Wednesday.
