HONG KONG — Japanese shares hit another record on Friday after US shares climbed to record highs the day before.
U.S. futures headed higher and oil prices rose.
The Nikkei 225 in Tokyo rose 1.9% to end at 39,940.00 in morning trading. In late February, the index surpassed the record high of 38,915.87 set at the height of financial euphoria in 1989, before a financial bubble burst and ushered in an era of faltering growth.
Japan’s unemployment rate fell to 2.4% in January, from a revised 2.5% in the previous month, but the purchasing managers’ index for industrial activity fell to 47.2 in February, indicating weaker domestic and international markets.
A PMI value below 50 means a contraction compared to the previous month.
Hong Kong’s Hang Seng rose 0.3% to 16,562.50, and the Shanghai Composite index rose 0.3% to 3,024.53.
According to the National Bureau of Statistics, China’s manufacturing activity shrank for the fifth month in a row in February to 49.1, while the unofficial Caixin PMI gave a more positive outlook, showing the manufacturing sector grew for the fourth month in a row.
Investors expect policies to revive the economy at China’s upcoming National People’s Congress next week, where Beijing will announce its annual GDP growth target.
The Korean market is closed for a holiday.
Elsewhere in Asia, the Australian S&The P/ASX 200 rose 0.6% to 7,745.60, while in Bangkok the SET fell 0.3%.
Thursday on Wall Street, the S said&The P500 rose 0.5% to 5,096.27, surpassing last week’s record high. The Nasdaq composite led the market with a 0.9% gain to 38,996.39, surpassing its all-time high set in 2021. The Dow Jones Industrial Average finished just below last week’s record after rising 0. 1%, to 38,996.39.
In the bond market, yields fell after a closely watched inflation report showed prices across the country rose much as expected last month. That calmed concerns that had been growing on Wall Street that inflation rates could see an uncomfortable reacceleration. Previous reports showed that prices rose more than expected in January at both consumer and wholesale levels.
“While inflation was higher than it has been in a while, it could be more of a flash in the pan than the start of something worse,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Thursday’s report kept alive hopes that the Federal Reserve could start cutting rates in June. Such a move would ease pressure on the economy and raise investment prices, and the Fed has indicated that several cuts may be coming this year.
The Fed’s key interest rate is at its highest level since 2001, hoping to reduce inflation by boosting the economy through more expensive mortgage and credit card payments. Hopes of coming rate cuts helped fuel the big rally in the U.S. stock market in late October, and the S&P500 just completed its fourth winning month in a row.
However, relief from interest rates would only be possible if the Fed sees additional compelling data showing inflation on a sustained decline toward its 2% target.
Traders have recently downgraded their forecasts for when the Fed might start cutting rates. A series of strong reports on the economy have lifted expectations from March. On Thursday, another report showed that fewer U.S. workers filed for unemployment benefits last week than economists expected. It is the latest signal of a remarkably resilient labor market.
In other trading, U.S. benchmark crude added 24 cents to reach $78.50 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, rose 33 cents to $82.24 a barrel.
The US dollar rose from 149.98 yen to 150.34 Japanese yen. The euro rose from $1.0803 to $1.0810.