© Reuters.
By Amber Warrick
Investing.com — Most Asian stocks rose on Friday as markets digested more signals about US monetary policy and positive economic data from China, while Japan’s Nikkei 225 Index rose on a Tokyo soft inflation reading.
It was the best performance of the day, up 1.5%, as data showed a substantial decline from a more than 40-year high in January. The reading, which generally heralds a similar trend in domestic inflation, puts less pressure on the Bank of Japan to start tightening, a scenario that is positive for Japanese stocks.
Friday’s gains also put the Nikkei on track for a 1.8% jump this week, its best weekly performance since mid-January.
Other Asian stocks were mildly positive, as optimism about China’s economic recovery somewhat offset growing fears of a more hawkish Federal Reserve.
The y China indices traded in a flat to high range on Friday but are expected to rise more than 1% each this week following a string of positive economic data.
A private survey showed on Friday that China expanded at a faster-than-expected pace in February. The reading followed government data showing China grew at its fastest pace in more than a decade as the post-COVID economic recovery gained momentum.
The optimism about China spread to other stocks with exposure to the country, mainly the Hong Kong index. The index jumped 0.8% on Friday and was the best performer in Asia this week with a rebound of 2.9%.
The index was also set for a weekly gain of 0.8%, while Australia’s index rose 0.4% on Friday.
The Indian and Indian indices were up more than 1% each as heavyweight tech stocks tracked gains in their US peers. But both indices were set for muted weekly performance.
But sentiment towards Asian markets was dampened by a rise in US Treasury yields this week, as continued signs of stubborn inflation and a strong job market raised expectations that interest rates would tighten. They will stay high longer.
Overnight comments from Federal Reserve officials offered some clarity on where US rates might peak this year. But officials also warned that any lingering signs of stubborn inflation could keep rates high for longer.
Rising interest rates had hit Asian markets through 2022 and have limited any major recovery in the region so far in 2023. Fears of a possible recession, triggered by pressure from higher rates, have also affected confidence this year.