Asian markets rose on Friday after a week of declines, driven by below-forecast US data that renewed hopes the Federal Reserve might cut interest rates this year.

Investors are closely watching for the release of the Federal Reserve's preferred inflation gauge later in the day, which could offer more clarity on the future of monetary policy. Earlier in the week, market sentiment had been dampened by strong economic data and warnings from Fed officials about the need to maintain high rates to control inflation.

US economic growth for the first quarter was less than expected, with personal consumption and jobless claims also missing forecasts. This pushed Treasury yields down from a four-week high, providing a boost to Asian markets.

Analysts, including Kyle Rodda from Capital.com, suggest that if the upcoming PCE index data aligns with recent trends, the Fed may refrain from further hikes and could potentially cut rates later in the year.

Investors are also eyeing the latest eurozone consumer price index ahead of the European Central Bank's June 6 meeting, where a rate reduction is anticipated.

Market Reactions:

Hong Kong's Hang Seng Index rose over 1%, while gains were also seen in Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila, and Jakarta.

The yen edged up against the dollar on expectations of further monetary tightening by the Bank of Japan, following a significant rise in Tokyo inflation.Weak performances among tech giants weighed on US markets, though Asian markets remained buoyant.

The yen strengthened against the dollar, reflecting inflation-driven expectations of another rate hike by the Bank of Japan. The euro and the pound also saw slight decreases against the dollar.

Oil prices dipped slightly, with West Texas Intermediate down 0.4% to $77.61 per barrel and Brent North Sea Crude down 0.3% to $81.64 per barrel.

 

Key Figures Around 0230 GMT:

- Tokyo - Nikkei 225:UP 0.2% at 38,119.96

- Hong Kong - Hang Seng Index:UP 1.3% at 18,458.04

- Shanghai - Composite:UP 0.3% at 3,100.63

- Dollar/Yen: DOWN at 156.69 from 156.82 yen

- Pound/Dollar: DOWN at $1.2722 from $1.2733

- Euro/Dollar: DOWN at $1.0821 from $1.0834

- Euro/Pound: DOWN at 85.05 from 85.07 pence

- West Texas Intermediate: DOWN 0.4% at $77.61 per barrel

- Brent North Sea Crude: DOWN 0.3% at $81.64 per barrel

- New York - Dow: DOWN 0.9% at 38,111.48

- London - FTSE 100: UP 0.6% at 8,235.15