Asian shares faced downward pressure on Friday, despite positive news regarding the U.S. economy. Japan’s benchmark, the Nikkei 225, dropped by 1.3% as inflation figures revealed a faster-than-expected slowdown in January, decreasing to 1.6% from December’s 2.4%. This decline in inflation eases the pressure on the Bank of Japan to tighten its ultra-lax monetary policy, which has injected substantial amounts of cash into the markets. The central bank’s inflation target remains at 2%. Robert Carnell, ING’s regional head of research Asia-Pacific, stated that the BOJ will observe the inflation path for the next few months and predicts a rebound above 2% in February.
Chinese markets ended their winning streak as the government implemented measures to stabilize share prices and the property sector. Hong Kong’s Hang Seng declined by 1.6% to 15,954.86, while the Shanghai Composite experienced minimal change, edging up 0.1% to 2,910.22.
In contrast, South Korea’s Kospi index rose by 0.3% to 2,478.56, while Australian markets were closed for a national holiday.
On Wall Street, the S&P 500 continued its record-breaking streak, climbing by 0.4% to reach 4,894.16 for the fifth consecutive day. The Dow Jones Industrial Average increased by 0.6% to 38,049.13, and the Nasdaq composite gained 0.2% to 15,510.50. IBM played a significant role in driving the market’s performance, with a 9.5% gain after reporting better-than-expected profits for the latest quarter. However, Tesla’s 12.1% drop limited the market’s overall gains.
The focus on Wall Street remained on a report indicating the continued robustness of the U.S. economy, surpassing last year’s predictions of an imminent recession due to high interest rates. The report also provided encouraging evidence that inflation continued to moderate at the end of 2023. These developments have increased hopes that inflation has cooled enough for the Federal Reserve to consider cutting interest rates this year, relieving pressure on financial markets and boosting investment prices.
Treasury yields declined in anticipation of rate cuts, with the 10-year Treasury yield slipping from 4.16% to 4.10% before the report’s release, and from 4.18% late Wednesday. In October, it reached 5%, its highest level since 2007.
In energy trading, benchmark U.S. crude dropped by 50 cents to $76.86 a barrel on the New York Mercantile Exchange, while Brent crude, the international standard, fell by 54 cents to $81.42 a barrel.
In currency trading, the U.S. dollar slightly strengthened against the Japanese yen, rising from 147.64 yen to 147.85 yen. The euro declined from $1.0848 to $1.0817.
This article was rewritten and edited to ensure its uniqueness and eliminate any plagiarism.
Asian shares were mostly lower on Friday, despite positive news about the U.S. economy. Japan’s benchmark, the Nikkei 225, declined 1.3% due to slower-than-expected inflation. This relieved pressure on the Bank of Japan to tighten its monetary policy. Chinese markets also fell after the government took steps to support share prices and the property sector. South Korea’s Kospi, however, rose 0.3%. On Wall Street, the S&P 500 set a record for a fifth straight day, with IBM leading the market. The U.S. economy’s strong performance and moderating inflation have raised hopes for interest rate cuts. Treasury yields fell, and American Airlines reported stronger-than-expected profits. In energy trading, benchmark U.S. crude and Brent crude both declined. The U.S. dollar slightly increased against the Japanese yen and the euro.
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