© Reuters
Investing.com – Most Asian stocks rose on Friday, tracking dovish signals from the region’s two largest central banks, as the Bank of Japan kept interest rates ultra-low and the People’s Bank of China began cutting borrowing costs.
However, the larger gains were limited as markets remained on edge about worsening economic trends and rising interest rates in the rest of the world, particularly the United States.
Japanese stocks reversed early losses as the Bank of Japan maintains a pessimistic outlook
Japan rose 0.2%, while a broader decline pared earlier losses after the Bank of Japan indicated no change in its quantitative easing and yield curve control policies.
The move indicates that Japanese monetary conditions will remain accommodative in the near term, making local equities look much more attractive than their global peers.
This notion has put both Nikkei and TOPIX at a 33-year high this week, after a stellar rally over the past month. Optimism about the Japanese economy also helped, with the Bank of Japan forecasting relatively strong growth in 2023.
Chinese stocks are supported by interest rate cuts, and stimulus bets
Chinese indices and indices rose about 0.4% each on Friday, extending gains for a second straight session as the People’s Bank of China began cutting lending rates to support economic growth.
The People’s Bank of China cut short- and medium-term interest rates this week, and is widely expected to cut its record rate on Tuesday. The move comes amid growing uncertainty about China’s post-COVID economic recovery, following a series of weak indicators for April and May.
But recent interest rate cuts, along with promises of more supportive measures from the government, have boosted hopes that China’s economy will rebound in the second half of the year.
The optimism about China spilled over into other exposed markets. Hong Kong rose 0.8%, while Australia added 0.8% on the strength of heavy mining stocks.
Indian indices opened around 0.4% higher, while South Korean indices added 0.5%.
However, the larger gains were limited amid concerns about rising US interest rates and slowing economic growth. The Fed, but has indicated at least two more increases this year to rein in soaring inflation.
This was followed by a series of weak US economic readings, which raised questions about how much room the Fed has to continue raising interest rates.