Asian markets swung Friday at the end of a strong week for investors following the US interest rate cut, with attention now turning to a call between Donald Trump and Xi Jinping.
While the Federal Reserve and boss Jerome Powell were not as forthright as hoped on future rate reductions the mood on trading floors remained upbeat.
The US central bank lowered borrowing costs Wednesday for the first time since December after a series of reports pointed to a slowdown in the country’s labour market, which offset stubbornly high inflation.
A closely watched gauge of future moves indicated two more this year but Powell warned decisions would be data-dependent.
With that in mind, even figures showing a sharp drop in initial jobless claims for last week did little to dampen expectations that rates will continue to be cut.
“The underlying trend remains one of only a gentle drift higher in claims, reinforcing the view that the US labour market is not showing signs of sudden weakness,” said National Australia Bank’s Rodrigo Catril.
All three main indexes ended Thursday at records, continuing a trend that has characterised markets in recent months, thanks to another surge in tech giants.
That came after news that chip titan Nvidia will invest $5 billion in struggling US rival Intel and jointly develop processors for PCs and data centres.
Asian trade was largely positive, with tech also enjoying healthy gains.
Tokyo rose with Sydney, Wellington, Manila and Jakarta while Hong Kong and Shanghai shifted between gains and losses.
Seoul and Taipei fell.
Talks between president Trump and Chinese counterpart Xi — their first since June — are due to take place later Friday, with the US president telling reporters they would discuss a deal to change ownership of the hugely popular video-sharing app TikTok.
The phone call also comes after high level officials from both sides met in Madrid where they spoke about trade between the economic superpowers, with the deadline for a US tariff pause approaching in November.
Also in view is the Bank of Japan’s latest policy decision. Expectations are for officials to hold interest rates but investors will be poring over any comments about the outlook amid political upheaval as the governing Liberal Democratic Party holds leadership elections.
“Some news outlets reported rumors that the BOJ may consider a rate hike this year, making Governor (Kazuo) Ueda’s remarks at the upcoming press conference a key focus,” wrote Gregor Hirt of Allianz Global Investors this week.
“Will he provide any expression of intent or timeline? One additional aspect favouring a hold is the added uncertainty from the LDP leadership race.
“The outcome is unpredictable at this time and there is also a chance the new prime minister may call for an early election, potentially creating further uncertainty. The BoJ is likely willing to wait for a clearer view on some of these topics.”
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 0.8 percent at 45,652.08 (break)
Hong Kong – Hang Seng Index: UP 0.2 percent at 26,602.86
Shanghai – Composite: DOWN 0.1 percent at 3,827.45
Euro/dollar: DOWN at $1.1774 from $1.1785 on Thursday
Pound/dollar: DOWN at $1.3530 from $1.3550
Dollar/yen: UP at 148.04 yen from 147.97 yen
Euro/pound: UP at 87.00 pence from 86.96 pence
West Texas Intermediate: DOWN 0.1 percent at $63.48 per barrel
Brent North Sea Crude: DOWN 0.2 percent at $67.34 per barrel
New York – Dow: UP 0.3 percent at 46,142.42 (close)
London – FTSE 100: UP 0.2 percent at 9,228.11 (close)
