Asian Shares Climb On Fed Rate Cut Expectations

Asian stocks advanced on Friday as concerns over artificial intelligence spending and valuations eased, and signs of cooling U.S. inflation bolstered expectations of looser U.S. monetary policy next year.

The Japanese yen extended losses for a second day running, helping ease fears of a sharp yen carry trade unwind. Gold ticked lower but hovered near record highs.

Oil was on track for a second weekly loss as investors weighed the risk of a global surplus against concerns over Venezuelan supply disruptions.

China’s Shanghai Composite index closed 0.36 percent higher at 3,890.45 after a choppy session.

Geopolitics remained in the spotlight after the Trump administration announced a massive package of arms sales to Taiwan valued at more than USD 10 billion.

Hong Kong’s Hang Seng index rose 0.75 percent to 25,690.53, extending gains for a third consecutive session.

Japanese markets rallied, the yen weakened and Japan’s 10-year government bond yield jumped to a 26-year peak after the Bank of Japan raised its key policy rate 25 bps to 0.75 percent, its highest level since September 1995, signaling a broader policy shift amid rising uncertainties surrounding the U.S. economy and trade policies.

Data showed earlier in the day that Japan’s consumer inflation remained well above the central bank’s 2 percent target in November.

The Nikkei average jumped 1.03 percent to 49,507.21 while the broader Topix index settled 0.80 percent higher at 3,383.66.

Artificial intelligence-linked shares soared, with technology investor SoftBank Group surging 6.1 percent after a solid outlook from Micron Technology. Advantest and Tokyo Electron climbed 2-3 percent.

Seoul stocks closed higher, led by carmakers and defense stocks. The Kospi average climbed 0.65 percent to 4,020.55. Hyundai Motor gained 2.1 percent and Hanwha Aerospace surged 3.9 percent.

Australian markets eked out modest gains after the release of unexpectedly tamer-than-expected U.S. inflation data.

The benchmark S&P/ASX 200 edged up by 0.39 percent to 8,621.40 while the broader All Ordinaries index closed 0.48 percent higher at 8,918.30.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 index gained 0.58 percent to close at 13,333.40.

Overnight, U.S. stocks closed higher as a softer-than-expected consumer price index inflation reading for November added to bets that the Federal Reserve will cut interest rates further in the new year.

Data showed the consumer price index rose 2.7 percent in November from a year earlier and 2.6 percent on a “core” basis — both figures coming in below economists’ expectations.

Another report showed first-time claims for unemployment benefits declined roughly in line with economist estimates in the week ended December 13th.

Micron Technology’s better than expected quarterly results and blowout guidance also sparked a rebound in technology shares.

The tech-heavy Nasdaq Composite jumped 1.4 percent, while the S&P 500 gained 0.8 percent and the Dow edged up by 0.1 percent to snap their four-day losing streaks.

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