Written by Stella Chiu
SYDNEY (Reuters) – Asian stocks rebounded on Friday, supported by gains in regional semiconductor makers, while the yen weakened sharply as investors cut bets that the Bank of Japan would soon abandon its ultra-easy policy. The outlook was for the week to end with a sharp decline.
Oil prices rose on concerns about increasing geopolitical risks in the Middle East. The United States on Thursday launched a new strike against Houthi anti-ship missiles in the Red Sea, two days after an Iranian attack inside Pakistani territory.
MSCI's broadest index of Asia-Pacific stocks outside Japan rose 0.9% on Friday, but was still down 2.9% for the week, its biggest weekly decline since mid-August.
Taipei-listed shares of Taiwan Semiconductor Manufacturing Co. (TSMC) rose 5.0% after the semiconductor manufacturing giant expected its sales to increase by more than 20% in 2024. The company's U.S. shares soared nearly 10% overnight, spurring a rally in tech stocks on Wall Street. [.N]
The MSCI Asia IT Index (excluding Japan) rose nearly 3%. The Global X Japan Semiconductor ETF rose more than 4%.
Japan's Nikkei Stock Average rose 1.6% on Wednesday, just below its 34-year high. Data showed Japan's core consumer inflation slowed for the second month in a row in December, increasing speculation that the Bank of Japan is in no hurry to tighten its ultra-easy monetary policy.
The yen was trading at 148.26 yen to the dollar, down 2.2% for the week and hitting its lowest level since early December.
Chinese blue-chip stocks fell 0.2%, after rebounding from a five-year low hit a day earlier on signs of state aid. Hong Kong's Hang Seng Index rose 0.4%. [.SS]
“Shares are not spooked by rising interest rates and are supported by a more robust economic environment and technology,” National Australia Bank head of market economics Tapas Strickland said.
“The US labor market maintains its ‘titanium status’…Given the resilience of the data, it is unlikely that the US Fed will rush to cut rates unless inflation is lower than expected.”
A day earlier, data showed weekly U.S. jobless claims unexpectedly fell, denting some hopes that the Federal Reserve would cut interest rates in March. US bond yields gradually rose and the dollar held steady.
In Asia, government bond yields rose slightly. The 10-year bond yield rose 2 basis points to 4.167% after rising 4 basis points overnight, while the 2-year bond yield ended little changed from the previous day, rising 1 basis point to 4.3672%.
Futures were still leaning toward the Fed's first rate cut in March, but confidence was down to 55% from 70% last week. On the other hand, the total amount of monetary relief this year was 140 basis points.
Atlanta Fed President Rafael Bostic said the central bank is prepared to cut U.S. interest rates sooner than expected if inflation falls faster than expected.
The European Central Bank (ECB) also warned in the minutes of its most recent meeting that it was too early to discuss policy easing.
Foreign exchange markets were sluggish, with the dollar index little changed against major markets at 103.36. [FRX/]
Oil prices fell slightly on Friday. US crude oil futures were flat on the day at $74.09 per barrel, while Brent futures were down 0.2% at $78.95.
Spot gold rose 0.1% to $2,023.89 per ounce.
(Reporting by Stella Qiu; Editing by Sonali Paul)
