Asian stocks reached a seven-month high on Friday, mirroring global trends as investors welcomed the possibility of a forthcoming easing cycle in interest rates led by major central banks. This kept pressure on the dollar and Treasury yields.
However, Japan stood out as an exception, with growing expectations that the Bank of Japan (BOJ) might exit negative interest rates this month, causing the yen to strengthen and domestic bond yields to rise.
In early Asia trade, MSCI's broadest index of Asia-Pacific shares outside Japan hit 538.47 points, its strongest level since August, marking a 1% increase and eyeing a nearly 2% weekly gain.
The previous session saw global stock indexes rallying to record highs following signals from the European Central Bank (ECB) and Federal Reserve Chair Jerome Powell about potential rate cuts.
Vishnu Varathan, Chief Economist for Asia ex-Japan at Mizuho Bank, noted the market's positive response to hints of rate cuts, interpreting them as an "open invitation to pivot-type rallies."
The two-year U.S. Treasury yield, indicating near-term rate expectations, fell to a one-month low of 4.499% as traders bet on imminent Fed rate cuts. The closely watched nonfarm payrolls report due later would provide additional clues on the U.S. rate outlook.
The yen reached a one-month high against the dollar at 147.54, driven by speculation that the BOJ might shift away from its ultra-easy monetary policy.
BOJ officials indicated the Japanese economy moving toward the central bank's 2% inflation target, contributing to the yen's rise.
Chinese stocks started strong, with blue chips rising 0.4%, and the Shanghai Composite Index gaining 0.25%. Hong Kong's Hang Seng Index surged over 1%.
China's export and import growth in the January-February period exceeded expectations, but the lack of details on strong stimulus disappointed investors during the annual parliament session.
In commodity markets, Brent rose to $83.27 a barrel, and U.S. crude gained to $79.33 per barrel. Spot gold edged 0.1% lower to $2,157 an ounce, down from its all-time high of $2,164.09, as the possibility of an imminent Fed easing cycle increased the appeal for the non-yielding precious metal.
Paraphrasing text from "Investing" all rights reserved by the original author.
