Dhaka, Sep 20 (V7N) – Asian markets continued to surge on Friday, following a global rally driven by a significant US interest rate cut earlier this week. The yen also strengthened slightly after the Bank of Japan (BoJ) decided against another rate hike.

Investor sentiment remained optimistic after the Federal Reserve’s bold decision to reduce rates by 50 basis points, the largest cut since the onset of the Covid-19 pandemic. This marked a shift from the expected 25-basis-point reduction, with the Fed signaling more cuts in the pipeline.

While some feared the aggressive cut might indicate underlying economic concerns, data showing US jobless claims at their lowest since May alleviated recession worries, suggesting a potential soft landing.

Wall Street responded positively, with the S&P 500 and Dow reaching new highs, and the Nasdaq climbing by more than two percent. This momentum carried into Asia, with Tokyo jumping over two percent, matching Thursday's gains, and Hong Kong rising more than one percent. Sydney, Seoul, Taipei, and Manila also experienced strong buying interest.

However, Shanghai saw a slight dip after China’s central bank chose not to lower interest rates despite ongoing concerns about the economy. Singapore and Jakarta also experienced declines.

Following the Federal Reserve's actions, attention turned to the BoJ, which opted to keep borrowing costs unchanged after its recent policy meeting. Investors are now focusing on the bank's statement and Governor Kazuo Ueda's comments for hints about future rate decisions.

The BoJ had previously raised rates in March, its first increase in 17 years, and followed it with another hike in July, which caused a surge in the yen. Investors reacted by pulling out of the carry trade, where they had borrowed yen to invest in higher-yielding assets. This week's appreciation of the yen to its strongest level since summer, trading below 140 per dollar, was driven by speculation of further tightening by the BoJ and potential rate cuts by the Fed.

Friday's meeting followed the release of Japan's August consumer price index (CPI), which showed a 2.8 percent increase as expected. UBS Securities’ Chief Economist for Japan, Masamichi Adachi, stated that another rate hike could be imminent, potentially by October, but market and political factors might push it to December.

However, Stefan Angrick, senior economist at Moody’s Analytics, warned that further rate hikes could strain the economy, noting that price pressures are expected to ease in 2025 as supply shocks diminish and the yen strengthens.

Key market figures around 0315 GMT:

  • Tokyo - Nikkei 225: UP 2.1% at 37,935.58 (break)
  • Hong Kong - Hang Seng Index: UP 1.4% at 18,272.53
  • Shanghai - Composite: DOWN 0.2% at 2,731.16
  • Dollar/yen: DOWN at 142.22 yen from 142.57 yen on Thursday
  • Pound/dollar: UP at $1.3292 from $1.3281
  • Euro/dollar: UP at $1.1165 from $1.1161
  • Euro/pound: DOWN at 84.00 pence from 84.03 pence
  • West Texas Intermediate: UP 0.1% at $72.01 per barrel
  • Brent North Sea Crude: DOWN 0.2% at $74.73 per barrel
  • New York - Dow: UP 1.3% at 42,025.19 (close)
  • London - FTSE 100: UP 0.9% at 8,328.72 (close)

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