SYDNEY, Sept 20 (Askume) – Asian shares continued to rise on Friday as the impact of a sharp U.S. interest rate cut faded, while the yen fell after the Bank of Japan kept interest rates unchanged and remained optimistic about the economic outlook.
In China, the central bank held its benchmark lending rate steady, dashing expectations of a rate cut . Chinese stocks were isolated within the sector, with blue chips (.CSI300) down 0.3% . The onshore yuan rose to its highest level in nearly 16 months, prompting state banks to intervene to prevent the yuan from rising too fast.
Following gains on Wall Street overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.7%, its biggest gain in two months. The index is expected to post a weekly gain of 2.5%.
The Nikkei share average (.N225) rose 2.1%, partly due to a weaker yen as bulls gave back some gains after recently hitting a 14-month high. It has gained 3.5% this week. Nikkei futures were largely unaffected by the BOJ’s decision.
As widely expected, the central bank kept short-term interest rates steady at 0.25% on Friday but raised its consumption outlook. Market attention will be on any hints from Governor Kazuo Ueda on the timing and pace of further rate hikes at a press conference after the meeting at 0630 GMT.
The dollar was last seen falling 0.2% to 142.31 yen against the yen, having risen nearly 1% this week.Data released on Friday showed Japan’s core inflation rose for a fourth consecutive month, reinforcing calls for policy tightening.
“No change to the current outlook for monetary policy is expected at today’s meeting, as the next BOJ rate hike is expected in December,” IG analyst Tony Sycamore said.
“If the UADA emphasizes the bank’s positive outlook on prices and economic activity, it could be seen as an accommodative stance, leading to another rise in USD/JPY towards 140.00.”
Overnight, Wall Street finally had time to digest the Federal Reserve’s first rate cut. With more relief measures on the way, investors are betting that the US economy will keep growing, while better-than-expected unemployment benefits data has further reinforced the idea that the labor market remains healthy.
The market estimates that there is a 40% chance that the Federal Reserve will cut interest rates by 50 basis points in November and 73 basis points by the end of the year. Rates are expected to remain at 2.85% by the end of 2025, which is currently considered the Fed’s neutral forecast.
US stock index futures were slightly lower on Friday. The S&P 500 and Dow Jones Industrial Average hit record highs on Thursday, while the Nasdaq rose 2.5%, led by technology stocks.
In currency markets, the dollar tumbled to near a one-year low against major currencies. Sterling held steady at $1.3278 against the dollar, which rose 0.7% to its highest level since March 2022, as the Bank of England kept interest rates steady.
Short-term U.S. Treasuries rose to a two-year high. Two-year Treasury yields fell 3 basis points on Friday but remained steady this week.
Commodities also extended their weekly gains, with gold hitting a record high of $2,592.17 an ounce and oil prices rising for a second consecutive week.
Brent crude futures fell 0.3% to $74.69 a barrel, but were still up 4.2% for the week.
