Asian shares saw moderate gains while U.S. futures displayed a mixed bag following the Bank of Japan's decision to raise its key policy rate to its highest level in 30 years. This increase of 0.25 percentage points brought the benchmark rate to 0.75%, a figure that remains low in comparison to other major global economies.
The market reaction to the BOJ's decision was relatively subdued, although it is anticipated that this move could have significant implications for both currency and cryptocurrency markets. Regional share prices advanced, buoyed by a recent uptick in Wall Street stocks, which rose on Thursday after a positive report on inflation. This report may allow the Federal Reserve to continue cutting interest rates in the upcoming year.
Futures for the S&P 500 remained largely unchanged, while the Dow Jones Industrial Average dipped slightly by 0.2%. In Tokyo, the Nikkei 225 index appreciated by 1.2%, closing at 49,568.66, propelled by financial sector companies likely to benefit from the rising interest rates. The Hang Seng index in Hong Kong increased by 0.4% to 25,610.50, and the Shanghai Composite index gained 0.5% to reach 3,895.75. Meanwhile, the Kospi in Seoul rose by 0.5% to settle at 8,628.70, while Taiwan's index saw a 0.9% uplift. Conversely, the Sensex in India experienced a slight drop of 0.2%.
On Thursday, European indices recorded gains as the Bank of England decided to cut its key interest rate while the European Central Bank opted to maintain its current rate. The S&P 500 rose by 0.8%, ending the day at 6,774.76, successfully breaking a four-day losing streak. The Dow added a marginal 0.1% to close at 47,951.85, and tech stocks propelled the Nasdaq composite to a notable increase of 1.4%, reaching 23,006.36.
Market optimism was aided by a report indicating that inflation for the previous month was lower than economists had anticipated, which may ease concerns for the Federal Reserve. Although inflation remains high at 2.7%, the possibility of it nearing the Fed's target of 2% could provide the central bank with the leeway to cut interest rates further in support of a slowing job market. Such cuts are generally favorable for Wall Street, as they can stimulate the economy and boost investment prices, although they may also aggravate inflationary pressures.
Nevertheless, the recent inflation report may not significantly influence the Fed's decisions, particularly given the volatility of economic data following the U.S. government shutdown. Next month’s forthcoming inflation data could deliver a clearer picture of the economic landscape. On the corporate front, Micron Technology, a prominent memory and storage solutions provider, saw its stock surge by 10.2% after exceeding analysts' expectations in profit and revenue for the last quarter.
Moreover, the ongoing influx of billions into artificial intelligence technology has placed spotlighted stocks like Nvidia, which has dominated market performance for years. However, concerns are mounting regarding whether stock valuations have escalated too rapidly and if customer investments in AI will yield sufficient returns. Additional worries loom over companies heavily borrowing to fuel the AI surge.
Among the notable winners, Oracle rose by 0.9%, and Broadcom experienced a 1.1% increase, both companies being central to such investor concerns. Nvidia, the chip manufacturing giant, climbed 1.8%, reinforcing its influence over the market due to its considerable size and reach. Another standout was Trump Media & Technology Group, which saw a remarkable jump of 41.9%, helping to reduce its significant year-to-date loss of 69.3%. This company, originally anchored in President Donald Trump's Truth Social platform, is now diversifying into nuclear power through a merger with TAE Technologies, forming a new entity where both will hold approximately equal shares.
In commodity markets, U.S. benchmark crude oil saw a decline, losing 16 cents to settle at $55.84 per barrel, while Brent crude dropped by 21 cents to reach $59.61 per barrel. The U.S. dollar gained ground against the Japanese yen, rising to 156.08 from 155.53, while the euro experienced a slight decrease against the dollar, slipping to $1.1719 from $1.1723. Bitcoin prices also witnessed an uptrend, reportedly reaching around $86,900.
