Asian stock markets advanced broadly at Friday’s open, with a key gauge of global equities on track for another record high, as calming geopolitical concerns and rising expectations for US Federal Reserve interest-rate cuts this year fueled investor optimism.
Trading desks across Asia are buzzing with excitement again, as the region appears to be shaking off recent tariff shocks and once again attracting investors with its solid growth prospects.
The positive momentum in Asia-Pacific markets largely tracked gains seen on Wall Street.
This followed comments from White House spokesperson Karoline Leavitt, who downplayed the impending start of tariff deals, which had previously weighed heavily on investor sentiment.
July 8 is the date when the so-called “liberation day” tariffs are set to take effect after a 90-day pause, and July 9 is the deadline for a deal with the European Union to avoid 50% tariffs.
However, Leavitt signaled potential flexibility, stating, “The deadline is not critical. Perhaps it could be extended, but that’s a decision for the president to make.”
This apparent softening of the US stance helped lift markets across the region.
Japan’s benchmark Nikkei 225 climbed an impressive 1.59% to reach a six-month high, decisively crossing the 40,000 mark for the first time since January 7.
The broader Topix index also advanced by 1.3%. This came as data showed that core consumer price inflation in Tokyo, excluding fresh food and fuel, rose 3.1% year-on-year in June.
This was slower than the 3.6% increase seen in the previous month and below the 3.3% gain anticipated by economists polled by Reuters, suggesting a potential easing of price pressures.
Elsewhere, Hong Kong’s Hang Seng Index added 0.1%, while mainland China’s CSI 300 index increased by 0.31%.
This was despite data from the National Bureau of Statistics showing that China’s industrial profits fell 9.1% year-on-year in the first five months of the year.
In contrast, South Korea’s Kospi index fell 0.76%, and the small-cap Kosdaq dropped by 0.57%. Over in Australia, the S&P/ASX 200 benchmark was flat.
Overall, equities in Japan, Hong Kong, and Australia rose on Friday, following a session where the US S&P 500 advanced 0.8% to come within striking distance of a new high.
The Nasdaq 100 had already achieved that feat, rising 0.9% on Thursday, which helped push MSCI’s global shares index to a record high.
A gauge of Asia-Pacific stocks also reached its highest level since September 2021, and US stock futures edged upward in Asian trade.
A sharp reversal: from jitters to reawakening
From stocks to currencies to credit, the rebound from the depths of the market turmoil seen in April has been impressive.
MSCI’s Asia equities index has jumped 25% to a four-year high, while a slump in the US dollar has powered a regional currency gauge to its strongest level since October.
Companies across the region are now rushing to raise money to capitalize on this market reawakening.
This marks a sharp reversal from the jitters that prevailed just a couple of months ago, when fears of a full-blown trade war and concerns that runaway inflation would limit central banks’ policy room weighed heavily on Asian assets.
Instead, a weakening US dollar has created space for interest-rate cuts across the region, with the Federal Reserve’s own widely-expected easing likely to provide additional tailwinds for global markets.
US Treasuries slipped after rallying on Thursday on increased expectations for Fed cuts, with the swaps market now fully pricing in two further rate reductions this year and increasing bets on a third.
There’s “a long list of positive headlines” out right now, said Chetan Seth, Asia Pacific equity strategist at Nomura.
He cited “softening US yields amid rising Fed rate cut expectations,” positive US tax and trade developments, and the fact that “in the background, the artificial-intelligence theme has regained momentum.
So stocks appear to be climbing the proverbial wall of worry.”
Indian markets poised to continue gaining streak
Indian benchmark indices, the BSE Sensex and NSE Nifty, are expected to continue their gaining streak on Friday.
The positive cues from global peers, driven by easing geopolitical concerns and rising hopes for Federal Reserve interest-rate cuts, are providing a strong foundation.
The domestic market is also likely to react positively to comments from US President Donald Trump, who suggested that a “very big deal” with India is likely to be signed soon.
Trump also noted that the US had signed a trade pact with China yesterday.
At 7:55 AM, Gift Nifty Futures were trading higher by 122 points at 25,732, indicating a solid start for the Sensex and Nifty50.
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