SYDNEY: Asian shares bounced on Friday, buoyed by a rally in regional chipmakers, while the yen was set to end the week with heavy losses as investors pared back bets the Bank of Japan would soon abandon its uber-easy policies.
Oil prices were on edge amid worries about increasing geopolitical risks in the Middle East.
The US launched new strikes against Houthi anti-ship missiles aimed at the Red Sea on Thursday, and Pakistan conducted strikes inside Iran, two days after Iranian strikes inside Pakistani territory.
MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 0.9% on Friday, but was still down 2.9% for the week, the biggest weekly loss since mid-August.
Taipei-listed shares of Taiwan Semiconductor Manufacturing (TSMC) surged 5.0% after the chipmaking giant projected 2024 revenue growth of more than 20%.
Its US shares soared nearly 10% overnight, fuelling a tech rally on Wall Street. MSCI Asia ex-Japan IT index gained nearly 3%.
Global X Japan semiconductor ETF was up more than 4%. Japan’s Nikkei rose 1.6% to just a touch below a 34-year top hit on Wednesday.
Data showed Japan’s core consumer inflation slowed for a second straight month in December, adding to speculation that the BOJ is not in a rush to tighten its ultra loose monetary policy.
The yen held at 148.26 per dollar, having lost 2.2% for the week to the lowest level since early December.
Chinese bluechips slipped 0.2% after bouncing off the five-year lows hit the previous day amid signs of state support.
Hong Kong’s Hang Seng index rose 0.4%.
“Equities haven’t been spooked by the higher rates backdrop, supported by the more robust economic backdrop and tech,” said Tapas Strickland, head of market economics at National Australia Bank.
“The US labour market retains its ‘Titanium Status’… Given data resilience, it is hard to see the US Fed rushing towards cuts unless inflation continues to print lower than expected.”
Asian stocks edge up after US inflation data, oil flat
Data overnight showed that US weekly jobless claims unexpectedly dropped, tempering some hopes of a March interest rate cut from the Federal Reserve.
Treasury yields crept higher and the dollar held firm. Treasury yields edged higher in Asia.
The 10 year rose 2 basis points to 4.167%, after an increase of 4 bps overnight, while the two-year yield crept 1 bp higher to 4.3672%, having ended the previous day little changed.
Futures were still leaning towards a first rate cut in March from the Fed but with less conviction at a 55% probability, down from 70% last week.
Meanwhile, the total easing this year stood at 140 basis points.
Atlanta Fed President Raphael Bostic said he would be open to reducing US interest rates sooner than he had anticipated if inflation fell faster than he expected.
The European Central Bank (ECB) also warned in minutes from its most recent meeting that it was far too soon to discuss policy easing.
In the foreign exchange market, moves were muted and the dollar index was little changed at 103.36 against its major peers. Oil prices were a little lower on Friday.
US crude futures were flat at $74.09 per barrel and Brent futures were at $78.95, down 0.2% on the day.
Spot gold rose 0.1% to $2,023.89 an ounce.
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