Asian stock markets saw a generally positive trend on Friday, with the notable exception of Japan, where investors were closely monitoring the upcoming general election set for Sunday.
In contrast, U.S. futures indicated a decline, while oil prices experienced an upward movement.
Japanese Prime Minister Shigeru Ishiba, who assumed office only weeks ago, has called a snap election to bolster support for the ruling Liberal Democratic Party, currently embroiled in a political funding scandal. This political instability adds to market uncertainties, complicating the Bank of Japan’s efforts to transition away from its long-standing policy of near-zero interest rates.
Recent government data revealed that core inflation in Tokyo reached 1.8% in October, falling below the central bank’s 2% target for the first time in five months. This development has strengthened expectations that the Bank of Japan will maintain its key interest rate during its upcoming policy meeting.
The Tokyo stock market reflected these sentiments, with the Nikkei 225 index dropping by 1% to close at 37,771.79. Conversely, the Japanese yen strengthened against the U.S. dollar, which traded at 151.64 yen, down from 151.89 yen earlier in the day.
In other Asian markets, Hong Kong’s Hang Seng index rose by 1.1% to 20,720.60, while the Shanghai Composite Index increased by 0.8% to 3,307.14. The People’s Bank of China announced it would keep its medium-term lending rate unchanged at 2%, also providing 700 billion yuan ($98.3 billion) in one-year loans to financial institutions.
Elsewhere, South Korea’s Kospi gained 0.3% to reach 2,590.30, and Australia’s S&P/ASX 200 climbed 0.1% to 8,216.50. Taiwan’s Taiex also saw a modest increase of 0.3%.
On Wall Street, the S&P 500 managed to rise 0.2% to 5,809.86, breaking a three-day losing streak, while experiencing fluctuations throughout the day. The Dow Jones Industrial Average fell by 0.3% to 42,374.36, and the Nasdaq composite saw an increase of 0.8% to 18,415.49.
Tesla led the stock market surge with a remarkable 21.9% increase, following the company’s announcement of better-than-expected quarterly profits. CEO Elon Musk projected a sales growth of 20%-30% for the upcoming year, despite revenue figures falling short of analysts’ forecasts. This marked Tesla’s best stock performance since 2013.
Conversely, Boeing’s shares fell by 1.2% as machinists voted to extend their strike, which has significantly disrupted aircraft production. More than 60% of union members voted against the proposed contract, prolonging the picketing for over six weeks.
After reaching record highs at the end of the previous week, stocks generally retreated this week due to rising Treasury yields, which often dampen investor appetite for equities. Many analysts have cautioned that stock valuations may be excessive, given that their prices have escalated more quickly than corporate earnings.
A report released Thursday presented a mixed overview of the U.S. job market. While fewer workers applied for unemployment benefits last week—an indication of potentially lower layoffs—the overall number of individuals receiving benefits surged to the highest level in almost three years.
Following the report, Treasury yields fluctuated, with the yield on the 10-year Treasury note decreasing to 4.20%, down from 4.25% late Wednesday, yet remaining higher than the 4.08% level noted at the end of last week.
Additionally, a preliminary report suggested that U.S. business activity may have slightly accelerated last month, fueled by resilience in the service sector despite weaknesses in manufacturing. The S&P Global report indicated a recovery in business confidence, as companies anticipate improved stability and certainty after the upcoming presidential election.
Moreover, new home sales exceeded economists’ expectations last month, signaling a robust housing market.
In early Friday trading, benchmark U.S. crude oil rose by 10 cents to $70.29 per barrel, while Brent crude, the international benchmark, increased by 13 cents to $74.16 per barrel. The euro fell to $1.0821, down from $1.0828.
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