HONG KONG — Asian shares rose on Friday, with Japan’s Nikkei leading regional gains after Wall Street hit record highs following the Federal Reserve deals. major cut in interest rates.
US futures and oil prices were lower.
The Bank of Japan concluded a two-day monetary policy meeting by announcing that its benchmark interest rate would remain unchanged at 0.25%.
In Tokyo, the Nikkei 225 index rose 2.1% to 37,935.58 after the country’s key inflation data accelerated for a fourth straight month in August. The core consumer price index rose 2.8% on an annual basis in August, surpassing the central bank’s 2% target and leaving room for further rate hikes.
Markets are closely monitoring signals from BOJ Governor Kazuo Ueda about the pace of future rate hikes.
“Given current economic conditions and recent central bank rhetoric, further policy adjustments are not expected from the BOJ until later this year or early 2025,” Anderson Alves of ActivTrades said in a commentary.
The US dollar fell to 142.32 Japanese yen from 142.62 yen. The euro rose to 1.1166 dollars from 1.1161.
China refrained from further monetary stimulus as the central bank left key lending rates unchanged on Friday. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, remained at 3.45% and the five-year rate, a benchmark for property mortgages, was held at 3.85%.
Hong Kong’s Hang Seng rose 1.1% to 18,206.68, while the Shanghai Composite index fell 0.2% to 2,729.69.
Elsewhere, the Australian S&P/ASX 200 rose 0.2% to 8,209.70. South Korea’s Kospi rose 0.8% to 2,600.29.
Thursday is the S&The P 500 jumped 1.7% to 5,713.64 for one of the best days of the year and last touched its all-time high in July. The Dow Jones Industrial Average jumped 1.3% to 42,025.19 and the Nasdaq Composite led the market with a 2.5% surge to 18,013.98.
The gains on Wall Street followed rallies in markets across Europe and Asia after the Federal Reserve cut interest rates on Wednesday for the first time in more than four years.
That closed the door for a run that saw the Fed hold its key interest rate at a 20-year high in hopes of slowing the U.S. economy enough to stop high inflation. Now that inflation has fallen from the highlight two summers agoChairman Jerome Powell said the Fed could focus more on keeping the labor market healthy and the economy out of a recession.
Wall Street’s initial reaction to Wednesday’s rate cut was a yawn. Markets had been rallying for months on expectations of lower interest rates. Stocks fell slightly after swinging a few times.
“Yet we come in today and we have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at BTIG. He said he didn’t expect such a big jump for stocks on Thursday.
The Fed is still under pressure as the labor market and hiring have slowed under the weight of higher interest rates. Some critics say the central bank waited too long to cut rates and that this may have hurt the economy.
Some investment banks have raised their forecasts for the extent to which the Federal Reserve will ultimately cut rates, expecting even bigger cuts than Fed officials.
The US presidential elections adds to uncertainties. One fear is that both Democrats and Republicans could push for policies that increase the U.S. government’s national debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.
In the bond market, the yield on the 10-year Treasury note held steady at 3.71%, where it stood late Wednesday. The yield on the two-year Treasury, which is more in line with expectations for Fed action, fell to 3.58% from 3.63%.
In other trading, U.S. benchmark crude lost 20 cents to $69.68 a barrel. Brent crude, the international standard, fell 22 cents to $73.43 a barrel.
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AP Business journalist Stan Choe contributed.