MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6% to the highest in two months, tracking overnight gains on Wall Street
Asian shares extended their rally on Friday following an outsized interest U.S. rate cut, while the yen edged higher as the Bank of Japan held rates steady and stayed upbeat on the economy.
European share markets are, however, set for a lower open, with EUROSTOXX 50 futures sliding 0.3% and FTSE futures declining 0.5%. Wall Street futures were also marginally down, after the S&P 500 soared to a record close on Thursday.
In China, the central bank kept its benchmark lending rates on hold, countering expectations for a move lower. Chinese shares were an exception in the region, with blue chips down 0.5%. The onshore yuan strengthened to the highest level in almost 16 months, leading to intervention by state banks to prevent it from appreciating too fast.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.6% to the highest in two months, tracking overnight gains on Wall Street. The index was headed for a weekly gain of 2.4%.
The Nikkei added 1.5% and was up 3.1% for the week.
The yen has rallied 14% from its low in early July but its ascent has met some resistance at the key 140 per dollar level. It was up 0.3% at 142.21 per dollar, but still down 1% on the week even in the face of broad dollar weakness.
Data released on Friday showed Japan’s core inflation accelerated for a fourth successive month, reinforcing the case for further policy tightening.
The yen has become stronger and the market has not completely settled down, so I think it is appropriate to leave rates unchanged for now, said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute.
The need for hikes as a measure to counter the weak yen has somewhat decreased. Rather, the BoJ will look at wages and prices and make adjustments in a way that will maintain a virtuous cycle of wages and prices, Maeda said.
Investors will now focus on any hints from Governor Kazuo Ueda on the timing and pace of further hikes at the post-meeting press conference at 0630 GMT.
