SINGAPORE, April 28 (Reuters) – Asian stocks rose on Friday as strong corporate earnings lifted sentiment despite ongoing concerns over economic weakness, while the yen weakened after the Bank of Japan kept interest rates extremely low despite a comprehensive review of the economy announced monetary policy.
MSCI’s broadest index of Asia Pacific equities outside Japan (.MIAPJ0000PUS) rose 0.45% but remained on course to end the month lower.
Japan’s Nikkei (.N225) rose 1%, while the yen fell 0.60% to a weekly low of 134.76 per dollar and Japanese government bonds rallied.
The BOJ kept its loose monetary policy stance unchanged, but revised its guidance on the future trajectory of monetary policy and announced a “broad” review of its monetary policy.
The central bank changed its forward guidance at its first meeting under new governor Kazuo Ueda, withdrawing a commitment to keep interest rates at “current or lower levels”.
“Waiting for the announcement triggered quite a bit of volatility in the yen and rising expectations that we will receive an optimisation,” said Charu Chanana, market strategist at Saxo Markets in Singapore.
“But eventually even their (BOJ) announcement of a policy review came with a timeline of 1 to 1.5 years, which was longer than the market expected.”
Overnight, U.S. stocks ended sharply higher on Thursday on upbeat results from leading technology companies, with Meta Platforms Inc (META.O), Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O) trading after the earnings release in the skyrocketed.
“As the earnings season accelerates, the macro and geopolitical clouds are clearing and corporate fundamentals are increasingly driving the market,” said Lewis Grant, senior portfolio manager for global equities at Federated Hermes.
“Investor sentiment remains as fragile as the global economy and the earnings season is providing much-needed transparency into the overall health of companies.”
E-mini futures for the S&P 500 fell 0.14% after Amazon.com Inc (AMZN.O) signaled its cloud growth would slow further as its business customers braced for turmoil and curbed spending .
Futures suggested that European stocks were set for a higher open, with Eurostoxx 50 futures up 0.46%, German DAX futures up 0.40% and FTSE futures up 0.34% .
China shares were up 0.87%. Geopolitical tensions combined with worries about the global economic outlook have weighed on investor sentiment in recent weeks.
Overnight data showed the US economy slowed more-than-expected in the first quarter, although price growth was hotter than economists had forecast.
Taylor Nugent, an economist at National Australia Bank, said the data showed “an unfortunate combination” of weaker-than-expected growth and stronger-than-expected price increases in the first quarter.
The core PCE price index, one of the measures of inflation tracked by the Federal Reserve, rose 4.9% after rising 4.4% in the previous quarter.
The data also showed that initial jobless claims fell, suggesting continued tightness in the job market, a key driver of inflation.
“Stubborn inflation data leaves little room for the Fed to watch for signs of a slowdown in activity and the labor market, should it develop further,” Nugent said.
Markets are pricing in an 85% chance the Fed will hike rates by 25 basis points at next week’s meeting, the CME FedWatch tool showed. Traders expect the rate hike to be the latest in the Federal Reserve’s fastest monetary tightening cycle since the 1980s.
The 10-year Treasury yield fell 1.7 basis points to 3.511% after posting its biggest intraday gain since March on Thursday as investors weighed the looming debt ceiling showdown in Washington.
The yield on the 30-year government bond fell 1.3 basis points to 3.743%.
The dollar index, which measures the currency against six peers, rose 0.227%, while the euro fell 0.16% to $1.1009.
US crude was recently up 0.54% at $75.16 a barrel and Brent was at $78.89, up 0.66% on the day.
Reporting by Ankur Banerjee Editing by Shri Navaratnam
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