Investing.com — Asian stocks were mostly higher on Friday, boosted by gains in the technology sector as investors cheered strong earnings from Microsoft and Alphabet, although anticipation of more signals on interest rates kept sentiment in check.
Japanese stocks also rose relatively less than their peers, with the focus squarely on the conclusion of the Bank of Japan meeting later in the day. Weaker than expected inflation data in Tokyo added to the uncertainty.
Regional markets tracked gains in US stock index futures, which rose sharply after stronger-than-expected earnings from tech giants Microsoft Corporation (NASDAQ:) and Alphabet Inc (NASDAQ:). Both stocks rose in aftermarket trading, with Alphabet hitting a record high.
Gains in US technology stocks were largely overshadowed by a weak overnight close on Wall Street, after weaker-than-expected data and a rise… The focus was now on the data – the Fed's preferred measure of inflation – which is due later in the day.
Japan's Nikkei 225 rose with focus on the Bank of Japan
The Japanese index rose 0.4%, while the broader index rose 0.2%.
Sentiment toward Japan was largely constrained by uncertainty before an agreement was concluded. While the central bank is widely expected to keep interest rates unchanged, investors are unsure whether it will offer hawkish signals in the face of weakness.
Lower than expected inflation data from Tokyo added to the uncertainty. Inflation in the Japanese capital fell below the Bank of Japan's annual target of 2% in April, giving the central bank less room to raise interest rates further.
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However, gains in technology stocks supported Japanese benchmark indices.
Asian tech upbeat after strong US earnings
High-tech Asian bourses were the best performers on Friday. South Korea's index rose 1%, while Hong Kong's index added 1.5%.
The Hang Seng Index also reached its highest level in five months on hopes of further stimulus measures in China.
Positive earnings from US tech giants raised hopes that demand for artificial intelligence – which has been the main driver of higher earnings – will continue to support technology valuations in the coming quarters. Gains in the technology sector also saw China and its indices rise by 0.8% and 0.6%, respectively.
Indian index futures pointed to a positive open, with domestic technology stocks also poised to track broader gains.
The Australian index was the only weak performer on the day, falling 1.3% in catch-up trading after Thursday's holiday.
Australian stocks were also affected by data showing an increase in inflation during the first quarter, which bodes well for higher long-term interest rates in the country.