Asian markets witnessed significant gains on Friday, driven by positive developments regarding China's evaluation of potential negotiations with the United States concerning President Donald Trump's tariffs. The Commerce Ministry of China acknowledged various statements from senior U.S. officials expressing a willingness to engage in discussions over tariffs, indicating that an assessment was underway in Beijing regarding these overtures.
Following this news, futures and oil prices showed upward trends. Hong Kong's Hang Seng index surged by 1.7%, concluding at 22,493.96, while markets in Shanghai remained closed due to a public holiday. Taiwan's benchmark jumped 2.2%, reflecting a broader optimism in the region. Tokyo's Nikkei 225 increased by 1.1%, reaching 36,844.97, and South Korea's Kospi rose by 0.4% to 2,565.89. Additionally, Australia's S&P/ASX 200 posted a gain of 1.1%, finishing at 8,231.60.
In the United States, the stock market benefited from strong earnings reported by major technology companies. Microsoft and Meta Platforms led Wall Street higher on Thursday, with both firms exceeding analyst expectations in terms of profit for the beginning of the year. The S&P 500 experienced a 0.6% increase, marking its eighth consecutive gain and bringing the index to 5,604.14, its longest winning streak since August. Similarly, the Dow Jones Industrial Average saw a modest rise of 0.2%, closing at 40,752.96, while the Nasdaq composite climbed 1.5% to 17,710.74.
Microsoft’s stock skyrocketed by 7.6% after the company attributed a 13% increase in overall revenue to thriving cloud computing and artificial intelligence sectors. Meta, the parent company of Facebook and Instagram, also reported better-than-expected revenue and profit, with its stock climbing 4.2%. Other companies, including CVS Health and Carrier Global, contributed to a trend of unexpected profit reports, which helped stabilize Wall Street over the past week. The S&P 500 is now within 8.8% of its record high set earlier this year, having briefly dipped nearly 20% below that mark.
However, concerns regarding the economic outlook persist, particularly in light of Trump's trade war, which has raised fears of a potential recession. For instance, General Motors' stock decreased by 0.4% after the company lowered its profit forecast for 2025, citing anticipated losses between $4 billion and $5 billion due to tariffs. In contrast, McDonald's shares fell by 1.9% after reporting weaker revenue than analysts had expected, despite slightly surpassing profit forecasts. The shifting sentiment among consumers regarding the economy amidst rising inflation has also been highlighted.
Consumer surveys are indicating increasing pessimism about the economy’s trajectory. Recent economic reports have painted a mixed picture, with some pointing toward a weakening landscape. One report indicated that more U.S. workers filed for unemployment benefits last week than economists had predicted, setting the stage for an upcoming comprehensive job market analysis.
Market participants remain wary of a worst-case scenario known as "stagflation," where economic stagnation occurs simultaneously with high inflation levels. With the Federal Reserve lacking effective measures to counter both issues concurrently, any adjustments to interest rates could exacerbate the opposite problem.
Treasury yields experienced fluctuations following Thursday's economic announcements. The yield on the 10-year Treasury bond initially dipped below 4.13% after the disappointing jobless claim report, only to recover later and trade at 4.21%, an increase from 4.17% the previous Wednesday.
Hopeful prospects regarding potential tariff rollbacks following trade agreements with other nations have also contributed to market support. In early trading on Friday, U.S. benchmark crude oil prices gained 42 cents to settle at $59.66 per barrel, while Brent crude rose by 40 cents to reach $62.53 per barrel. Additionally, the U.S. dollar strengthened against the Japanese yen, trading at 145.36 yen, compared to 145.40 yen previously. The euro also showed slight gains, reaching $1.1306 from $1.1292.
