Asian stocks experienced an uptick on Friday, buoyed by reduced concerns over a potential U.S. recession and supportive inflation data from China. Despite the day’s gains, regional markets were still on track for weekly losses following significant declines earlier in the week.
The positive movement in Asian equities was influenced by Wall Street’s upbeat performance, driven by better-than-expected U.S. jobless claims data. This data alleviated concerns about a severe downturn in the U.S. labor market, with U.S. stock index futures also showing slight increases in Asian trading.
China’s Markets Lag Despite Positive Inflation Data
In China, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes each rose by 0.3%, though they lagged behind other Asian markets. Both indexes are down approximately 0.8% for the week, marking their third consecutive week of losses.
However, recent inflation data from China showed signs of improvement. Consumer price index (CPI) inflation exceeded expectations, while producer price index (PPI) inflation decreased at a slower rate than anticipated. These trends suggest that recent interest rate cuts by the People’s Bank of China are starting to take effect. Nevertheless, it remains uncertain whether the country’s deflationary pressures will be sustainably reversed.
Recent weeks have seen a decline in sentiment towards Chinese markets, with benchmark indexes hovering near six-month lows amid a series of weak economic indicators.
Japanese Stocks Surge, Recovering Weekly Losses
Japanese equities experienced a notable rebound, with the Nikkei 225 and TOPIX indexes surging 2% and 1.5%, respectively, on Friday. Despite these gains, both indexes are still expected to end the week down about 1.5%. The rebound helped recover a significant portion of earlier losses.
The resurgence in Japanese markets followed attempts by Bank of Japan officials to mitigate concerns over the central bank’s unexpectedly hawkish stance from the previous week. Additionally, bargain hunting in major tech stocks, along with strong earnings reports from companies like Tokyo Electron, supported the market. Tokyo Electron’s stock rose 1.7% following better-than-expected earnings for the June quarter and an increase in demand from the artificial intelligence sector.
Broader Regional Advances
Broader Asian markets also advanced, with technology-heavy indexes such as South Korea’s KOSPI and Hong Kong’s Hang Seng climbing between 1.5% and 2%. These gains mirrored the rebound in U.S. markets.
Australia’s ASX 200 rose 1.4%, reducing its weekly loss to 1.9% and recovering a substantial portion of its earlier declines.
In India, futures for the Nifty 50 index indicated a slightly positive opening after the index and the BSE Sensex 30 fell on Thursday. This decline followed an unexpectedly hawkish tone from the Reserve Bank of India, which also slightly downgraded its growth outlook for the current quarter
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