Asian stock markets are poised for gains, inspired by a rebound on Wall Street, where stocks rose from early lows despite higher-than-expected Consumer Price Index (CPI) data. Leading the charge, the technology-rich Nasdaq experienced notable growth, particularly in technology and semiconductor industries, propelling the S&P 500 to an unprecedented high. While equities showed resilience, the bond market responded to the inflation figures in a more conventional manner, with Treasury notes experiencing a sell-off. This reaction in the bond market may slightly temper the enthusiasm for equities. However, should market players begin to anticipate softer U.S. data in the near term, Asian stocks may maintain their upward trajectory.
In Japan, the stock market is likely to benefit from a weakening Yen, which followed remarks by Bank of Japan Governor Ueda. He pointed out several areas of economic softness, suggesting a cautious stance from the BoJ, despite some expectations for a shift towards more hawkish policies in the upcoming meeting. Investors are paying close attention, but with a global bond market leaning towards dovish expectations for the coming year, the BoJ is expected to continue its gradual policy normalization, taking action only when supported by comprehensive data to avoid economic disruption. Future policy directions are anticipated to align with Ueda’s emphasis on keeping monetary conditions supportive, even after moving away from negative interest rates. This dovish adjustment in expectations for BoJ policy may further buoy Japanese stocks.
