Asian stock markets displayed mixed performance on Friday, with U.S. stocks inching closer to their record highs following recent economic reports that aligned closely with expectations. U.S. futures remained relatively stable, and oil prices experienced an uptick.
Japanese Market Activity
Japan’s benchmark Nikkei 225 fell 0.9% to 36,491.80 in morning trading, following a 3.4% gain on Thursday. The Japanese yen strengthened against the U.S. dollar, with the USD/JPY exchange rate dropping to 141.05 from 141.79. This appreciation in the yen puts additional pressure on Japan’s export sector.
IG market analyst Yeap Jun Rong noted that the Bank of Japan is not expected to alter its interest rates in its upcoming meeting next week. However, there might be preparations for potential rate hikes in December and beyond. Industrial production data set for release later on Friday could further influence the yen’s value.
Chinese and Hong Kong Markets
In Hong Kong, the Hang Seng Index rose by 1.1% to 17,422.75. Conversely, the Shanghai Composite Index edged down by 0.1% to 2,714.77. China is anticipated to release its monthly economic data on Saturday, with forecasts predicting a slowdown in key indicators such as industrial production, fixed asset investment, and retail sales.
Australian and South Korean Markets
Australia’s S&P/ASX 200 gained 0.3% to 8,096.00, while South Korea’s Kospi dipped by 0.1% to 2,568.41.
U.S. Market Performance
On Thursday, U.S. stocks saw significant gains. The S&P 500 increased by 0.7% to 5,595.76, approaching its July record and positioning itself for a fourth winning week in the past five. The Dow Jones Industrial Average rose 0.6% to 41,096.77, and the Nasdaq Composite climbed 1% to 17,569.68. Nvidia was a major contributor to the S&P 500’s rise, with its stock up 1.9% for the day and nearly 16% for the week. The chipmaker’s stock has stabilized after a significant summer decline due to concerns about overvaluation amid the AI frenzy.
U.S. Economic Data
Recent U.S. economic data showed a slight increase in unemployment benefit claims, though levels remain low historically. Additionally, wholesale prices rose by 1.7% in August compared to the previous year, reflecting a slowdown from July’s rate. However, an underlying inflation measure exceeded expectations. This data, along with Wednesday’s consumer price report, has led traders to anticipate a quarter-point rate cut by the Fed next week, rather than a larger half-point reduction.
Bond and Mortgage Market
In the bond market, the yield on the 10-year Treasury note edged up to 3.68% from 3.66% late Wednesday. This uptick follows a period of declining yields due to anticipated rate cuts. The decrease in yields has helped reduce the average rate on a 30-year mortgage in the U.S. to its lowest level in 19 months, according to Freddie Mac.
Energy Prices
In energy trading, benchmark U.S. crude oil prices increased by 31 cents to $68.28 per barrel. Brent crude, the international benchmark, also rose by 31 cents to $72.28 per barrel.
Currency Movements
The euro strengthened slightly against the dollar, with the exchange rate moving to $1.1086 from $1.1074.
Conclusion
As global markets react to a range of economic indicators and policy expectations, Asian stocks displayed varied movements, while U.S. markets approached record highs. The interplay between inflation data, central bank policies, and global economic conditions continues to influence market performance across regions.
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