By Gregor Stuart Hunter
SINGAPORE, Jan 23 (Reuters) – Stocks advanced in Asian trading on Friday after the Bank of Japan left benchmark interest rates on hold, while gold and silver surged to new peaks as the U.S. dollar came under renewed pressure.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.5%, while the Nikkei 225 climbed 0.3%. S&P 500 e-mini futures fluctuated between gains and losses, trading up 0.2%.
The yen weakened 0.1% against the greenback after the BOJ’s decision, last trading at 158.61 yen per dollar.
“The tone appears hawkish,” said David Chao, global market strategist for Asia-Pacific at Invesco in Singapore. “The BOJ has raised four of its six inflation projections and indicated that further rate hikes are likely if these forecasts are realised.”
However, the statement stopped short of commenting on recent volatility in Japanese government bonds. “It’s evident that the Takaichi administration is monitoring the bond market closely and is concerned about the recent meltdown,” Chao added. “It would be reassuring to see the BOJ demonstrate the same level of attentiveness.”
BOJ Governor Kazuo Ueda will hold a news conference to explain the decision at 3:30 p.m. local time (0630 GMT).
Earlier in the trading session, government data showed Japan’s core consumer prices rose 2.4% in December from a year earlier, in line with analysts’ estimates.
Stocks on Wall Street on Thursday extended their rebound for a second day after U.S. President Donald Trump walked back earlier threats of tariffs on European goods and ruled out taking control of Greenland by force. The S&P 500 climbed 0.5% and the Nasdaq Composite rallied 0.9%. “Markets welcomed the shift, with a rebound in risk assets and a flattening of government bond yield curves,” analysts from Societe Generale wrote in a research report. “Policy uncertainty remains high, however. Further twists and turns are likely.”
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was last up 0.1% at 98.38, meandering around its lowest levels of the year after logging its biggest one-day fall in six weeks on Thursday.
Fed funds futures are pricing an implied 96% probability that the U.S. Federal Reserve will keep rates on hold at its next two-day meeting on January 28, little changed from a day earlier, according to the CME Group’s FedWatch tool.
The yield on the U.S. 10-year Treasury bond was last down 1.2 basis points at 4.237%.
Precious metals markets set new records as the dollar wallowed around the lows of the year. Gold rallied for a fifth day, climbing 0.1% to $4,943.43 per ounce, while silver was up 2.8% at $98.88 per ounce. Platinum also scaled new highs.
“The dollar weakness is about a loss of U.S. credibility and prestige,” said Kyle Rodda, senior market analyst at Capital.com in Melbourne. “The rise in gold is the inverse of the loss of U.S. credibility,” he added. “There’s a lot driving gold. But the main driver this week is the loss of trust in the U.S.”
South Korean stocks led gains in Asia, with the KOSPI up for a third day by 0.9%. The index crossed the 5,000 mark for the first time on Thursday, a milestone President Lee Jae Myung had promised to reach through market reforms and tax measures to close the so-called “Korea discount”.
The gains for the tech-heavy index, anchored by chipmaker Samsung Electronics, came after Intel on Thursday forecast quarterly revenue and profit below market estimates. The U.S. chipmaker has struggled to satisfy demand for server chips used in AI data centres, which sent its shares down 11% in after-hours trading. In energy markets, Brent crude futures were last up 0.9% at $64.61 a barrel, steadying after Trump’s softer tone towards Greenland and Iran eased fears of geopolitical risks disrupting supply. Bitcoin gained 0.7% to $89,817.64, while ether was last up 0.6% at $2,961.52.
(Reporting by Gregor Stuart Hunter; Editing by Christian Schmollinger and Jacqueline Wong)
