TOKYO — Asian shares mainly rose on Thursday as investors turned their attention to what the Bank of Japan could decide on monetary policy later this week.
The Bank of Japan is not expected to raise interest rates when it concludes its meeting on Friday, but the economy is under pressure from the dollar’s prolonged rise against the Japanese yen.
“Given the Fed’s recent ‘hawkish hold’ outcome, if the BOJ were to stick to its usual accommodative tone in terms of policy settings, that could pave the way for a continuation of the US dollar’s upward trend towards the Japanese yen . Yeap Jun Rong, market analyst at IG, said in a commentary.
In currency trading, the US dollar fell from 156.71 yen to 157.14 Japanese yen. The euro was at $1.0805, down from $1.0812.
As expected, the Federal Reserve kept its key interest rate steady on Wednesday after its latest policy meeting. And government bond yields fell after a report on inflation showed that U.S. consumers paid prices 3.3% higher for food, insurance and everything else last month than a year earlier. Economists had expected inflation to remain at 3.4%.
Japan’s benchmark Nikkei 225 fell 0.2% to 38,807.36 in afternoon trading. The Australian S&The P/ASX 200 rose 0.4% to 7,749.30. South Korea’s Kospi rose 1.2% to 2,760.31. Hong Kong’s Hang Seng gained 0.5% to 18,017.83, while the Shanghai Composite fell 0.2% to 3,030.12.
Wednesday on Wall Street, the S&The P500 added 0.9% to its all-time high set a day earlier, closing at 5,421.03. The Nasdaq index also built on its own record, rising 1.5% to 17,608.44. The Dow Jones Industrial Average lagged the market with a dip of 0.1% to 38,712.21.
Smaller companies that need to borrow to grow and therefore may feel the pressure of higher interest rates more than larger rivals led the market. Smaller stocks in the Russell 2000 index rose 1.6%.
For Wall Street, a slowdown in inflation isn’t just good for American households struggling to keep up with prices rising rapidly, it also opens the door to the Federal Reserve lower its key interest rate. Such a move would ease pressure on the economy and boost investment prices.
Everything from bitcoin to gold and copper rallied after inflation data raised expectations of coming rate cuts. Nervousness among investors in American equities also decreased.
Policymakers welcomed the latest update on inflation, but “we will need more good data to boost our confidence,” Fed Chairman Jerome Powell said. He reiterated the Fed’s mantra that it needs an accumulation of data showing inflation is sustainably moving toward its 2% target before the Fed cuts the fed funds rate, which is at its highest level in more than two decades .
“We’ll have to see where the numbers point the way,” he said, reiterating the Fed’s pledge to take steps based on where the incoming reports are heading.
A lower interest rate could mean easier Mortgage interest helps with that inject energy into the housing market. Housebuilder DR Horton climbed 3%. Builders FirstSource, which sells vinyl windows, custom millwork and other building materials, rose 5.3%.
Oracle helped Wall Street higher with a 13.3% jump, even as the company reported weaker earnings for the latest quarter than analysts expected. Financial analysts pointed to strong bookings, including contracts related to artificial intelligence training.
The buzz around AI has sent stocks soaring to record highs, despite concerns about high interest rates and the resulting slowdown in the economy. Nvidia again the strongest force that the S&P500 higher, with a gain of 3.5%. The chip company has become the poster child of the AI rush and its total market value exceeds $3 trillion.
Apple was almost as strong a force as the S&P500 as Nvidia after a 2.9% increase. The stock has jumped in the past two days after initially receiving a cool response following the announcement of a number of stocks AI-related offers comes to its operating systems.
In energy trading, benchmark U.S. crude lost 22 cents to $78.28 a barrel. Brent crude, the international standard, fell 25 cents to $82.35 a barrel.