Asia stocks drift higher with BOJ rate hike, China policy in focus

Investing.com– Most Asian stocks rose on Friday tracking record highs on Wall Street and optimism over more policy support in China, although caution before a Bank of Japan meeting still kept investors on edge. 

Regional markets took a positive lead-in from Wall Street, where the hit a record high as President Donald Trump said he will call for lower interest rates from the Federal Reserve. Trump 

U.S. stock index futures steadied in Asian trade, with focus turning to a next week, where the central bank is widely expected to keep rates unchanged. 

Sentiment towards Asian markets was also supported this week by China outlining more support for local equities, as they grappled with concerns over increased trade tariffs under Trump.

Japanese stocks upbeat with BOJ rate hike in focus 

Japan’s and indexes rose 0.8% and 0.7%, respectively, taking support from gains in technology stocks.

Both indexes were trading up between 3% and 5% this week, as analysts bet that a BOJ rate hike was largely priced in.

The central bank is widely expected to at the conclusion of a meeting later on Friday. Strong inflation data, released earlier in the day, furthered bets on a rate hike. 

But while higher rates bode poorly for Japanese markets, they also reflect increasing confidence in the local economy, which stands to benefit domestically exposed sectors. 

Purchasing managers index released on Friday showed Japan’s sector shrank for a seventh consecutive month in January. But growth in picked up sharply.

Chinese stocks rise on policy cheer; Hong Kong rallies 

China’s and indexes rose 0.7% and 0.4%, respectively, extending gains from earlier in the week.

Hong Kong’s index was a standout performer in Asia, rallying 1.7% on gains in major chipmaking stocks, as investors bet that recent U.S. export controls would boost local demand for the sector.

Sentiment towards China was buoyed by the government asking state-run insurers and financial institutions to deploy more capital in local equities. 

This helped Chinese markets overcome a weak start to the week, after Trump raised the prospect of imposing 10% trade tariffs on China by as soon as February 1.

Chinese markets will be closed next week for the Lunar New Year holiday. But before that, key data for January is due on Monday. 

Broader Asian markets were mostly upbeat. Australia’s added 0.5%, even as showed business activity remained weak in January. 

Gains in chipmaking stocks- on optimism over a $500 billion artificial intelligence project in the U.S.- drove South Korea’s up 0.8%. 

Singapore’s index fell slightly as the Monetary Authority of Singapore loosened monetary policy for the first time since 2020, warning that it expects growth to be slower than initially forecast this year. But inflation is also expected to decline.

Futures for India’s index pointed to a flat open, as the index wallowed near seven-month lows.