Asian stocks surged on Friday, buoyed by robust overnight gains on Wall Street, with Japanese and Australian markets reaching record highs amidst growing anticipation of lower interest rates in 2024.
Following a rally in Wall Street, where the S&P 500 and NASDAQ Composite achieved record closing highs fueled by strong buying in technology shares, regional markets experienced notable gains. This surge came after the release of key PCE inflation data for January, which met expectations, fueling speculation of interest rate cuts by the Federal Reserve by June.
U.S. stock futures exhibited mild positivity during Asian trade.
Japanese Stocks Lead Surge, Nikkei 225 Hits Record High
Japanese stocks emerged as the standout performers in Asia, with the Nikkei 225 soaring by 1.7% to reach a historic high of 39,920 points. The broader TOPIX index also climbed by 1.1%, marking a lifetime high of 2,707.05 points.
The remarkable gains were primarily driven by the technology sector, with Japanese chipmakers and chip-related stocks mirroring substantial gains seen in their U.S. counterparts, fueled by optimism surrounding advancements in artificial intelligence. Tokyo Electron Ltd. (TYO:8035) surged by 4.6%, while Advantest Corp. (TYO:6857) witnessed a 2.6% increase.
Despite data revealing a larger-than-expected contraction in the manufacturing sector for January, Japanese markets largely shrugged off concerns, maintaining their upward trajectory.
Broader Asian Markets See Positive Momentum
Broader Asian markets also demonstrated positive momentum, albeit at a slower pace. Australia’s ASX 200 rose by 0.5% and achieved a record high of 7,737.80 points, following closely below lifetime peaks from the previous session.
The rally in Australian shares was predominantly fueled by growing expectations that the Reserve Bank of Australia would refrain from further interest rate hikes. Additionally, optimism prevailed ahead of the release of fourth-quarter GDP data scheduled for the following week.
Chinese Shares Extend Rebound Despite Mixed PMIs
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes posted gains of 0.5% and 0.2%, respectively, supported by a rise in tech stocks. Hong Kong’s Hang Seng index also added 0.5%.
Despite official PMI data indicating continued subdued business activity in China through February, local stocks extended their recent rebound. The manufacturing sector contracted for the fifth consecutive month, although increased consumer spending during the Lunar New Year holiday buoyed non-manufacturing businesses. A separate private survey revealed slightly better-than-expected growth in the manufacturing sector for February.
Outlook for Other Asian Markets
Futures for India’s Nifty 50 index hinted at a positive opening, with expectations of testing record highs following GDP data indicating India’s sustained economic outperformance in the December quarter. GDP growth of 8.4% surpassed expectations, solidifying India’s position as the fastest-growing major economy over the past two years.