Japanese stocks surged and Asian markets started strong on Friday, following substantial gains on Wall Street fueled by positive U.S. retail sales data that reassured investors about the health of the global economy.
The Nikkei 225 index rose nearly 3%, continuing its bullish trend after a downturn earlier in the week due to concerns about the U.S. economy and a stronger yen. Japan’s economic growth also contributed to the market’s optimism.
Alvin Tan from RBC Capital Markets noted, “Stabilising market conditions could lead the Bank of Japan to consider further policy normalization, but the recent shock from Japan’s equity tumble and yen surge likely means that another hike won’t be on the BoJ’s September agenda.”
Following the retail sales report, the dollar strengthened more than 1% against the yen. Despite recent market turmoil triggered by weaker-than-expected labor market data, which raised fears of a recession, continued consumer spending appears to be alleviating these concerns.
Independent analyst Stephen Innes commented, “Thursday’s numbers suggest the Fed might achieve a soft landing, managing to slow the economy just enough to control inflation without causing a recession.”
In China, industrial production slowed and unemployment rose in July, while consumer spending marginally exceeded expectations. Despite these mixed signals, markets in Hong Kong and Shanghai saw positive movement. The Hang Seng index made a strong start, and the Shanghai composite was slightly higher.
Chinese tech giant Alibaba, despite reporting a nearly 30% drop in quarterly profit, saw its stock rise in Hong Kong following gains in New York. Alibaba’s performance is seen as a barometer of broader economic trends in China.
Markets in Singapore, Seoul, Sydney, Taipei, Manila, and Jakarta also posted healthy gains.
Key Figures Around 0310 GMT:
- Tokyo – Nikkei 225: UP 2.9% at 37,800.42
- Hong Kong – Hang Seng Index: UP 1.7% at 17,397.64
- Shanghai – Composite: UP 0.1% at 2,880.05
- Euro/Dollar: UP at $1.0980 from $1.0972
- Pound/Dollar: UP at $1.2874 from $1.2853
- Dollar/Yen: DOWN at 148.82 yen from 149.06 yen
- Euro/Pound: DOWN at 85.29 pence from 85.36 pence
- Brent North Sea Crude: DOWN 0.1% at $80.96 per barrel
- West Texas Intermediate: DOWN 0.2% at $78.00 per barrel
- New York – Dow: UP 1.4% at 40,563.06 points (close)
- London – FTSE 100: UP 0.8% at 8,347.35 (close)
