Financial markets across Asia exhibited measured gains on Friday following the Bank of Japan’s landmark decision to raise its benchmark interest rate for the first time in three decades. The BOJ’s quarter-point hike brings its policy rate to 0.75%, marking a significant departure from its long-standing negative interest rate policy while remaining substantially lower than rates in other major economies.
The Nikkei 225 index advanced 1.2% to 49,568.66, propelled primarily by financial sector stocks anticipating improved profitability in a higher-rate environment. Regional indices followed suit with Hong Kong’s Hang Seng rising 0.4% and Shanghai Composite adding 0.5%. South Korea’s Kospi climbed 0.5% while Taiwan’s index gained 0.9%, though India’s Sensex dipped marginally by 0.2%.
This Asian market momentum extended the positive sentiment from Wall Street’s Thursday performance, where the S&P 500 broke a four-day losing streak with a 0.8% gain. The tech-heavy Nasdaq composite led gains with a 1.4% surge, bolstered by an encouraging inflation report that showed consumer prices rising at 2.7% annually—still above the Federal Reserve’s 2% target but below economist projections.
The inflation data provided reassurance to markets that the Fed might maintain its projected rate-cutting path next year. Meanwhile, European markets had advanced on Thursday following the Bank of England’s rate cut and the European Central Bank’s decision to maintain steady rates.
Corporate performances contributed to the positive sentiment, with Micron Technology surging 10.2% after exceeding quarterly profit and revenue expectations. AI-related stocks including Nvidia (1.8%), Oracle (0.9%), and Broadcom (1.1%) posted gains despite growing market scrutiny about AI investment returns and valuation concerns.
In currency markets, the dollar strengthened to 156.08 yen while the euro edged slightly lower. Bitcoin maintained its position around $86,900 as cryptocurrency markets watched for potential ripple effects from the BOJ’s policy shift.