Investing.com — Most Asian stocks rose on Thursday as the technology sector tracked an overnight rally on Wall Street, though overall gains were limited after the Federal Reserve lowered its outlook for interest rate cuts.
Japanese stocks lagged their peers as the market awaits a Bank of Japan meeting where the central bank is widely expected to tighten policy further.
Regional markets received positive news from Wall Street, where stocks hit record highs on Wednesday as artificial intelligence (AI)-related tech stocks rallied, and weak inflation data also helped.
But non-tech sectors were more moderately moved, especially after the Fed warned it was reducing the likelihood of cutting interest rates this year to one from three, with some policymakers apparently arguing that strong inflation means no cuts should be made.
This thinking limited gains in most Asian markets.
Japanese stocks slump amid growing concerns about the Bank of Japan
Japanese stocks and major stock indexes were trading in a flat to lower range on Thursday, and sentiment towards the Japanese market worsened before the open of trading on Friday.
The Bank of Japan is likely to keep interest rates unchanged but is expected to further reduce its bond purchases and tighten monetary policy.
The move comes after the Bank of Japan raised interest rates for the first time in 17 years in March, putting an end to its yield curve control policy. The bank also signaled a final reduction in its bond purchases, which is expected to happen as soon as this week.
However, sustained weakness in Japan's economy, which contracted in the first quarter of 2024, appears to be limiting the Bank of Japan's ability to tighten monetary policy.
AI optimism fuels tech, boosting Apple suppliers
Technology-led stock indexes were the best performers on Thursday, with South Korean stocks up 1.5% and Hong Kong stocks up 0.4%.
Tech stocks followed a rally in US stocks overnight, jumping more than 7% after Apple (NASDAQ:) announced plans to incorporate AI into its flagship products. The iPhone maker will also partner with OpenAI.
Apple's gains have also spilled over to its Asian suppliers, including TSMC (TW:) (NYSE:) Foxconn Precision Industries Co., Ltd. (TW:) rose about 2% each.
Korean SK hynix Co., Ltd. (KS:) And Samsung Electronics Co., Ltd. (KS:) rose 3.5% and 2.4%, respectively, while China's AAC Technologies (OTC:) Holdings (HK:) rose 2.6%.
Other Asian markets were mixed. Australia rose 0.4%, paring intraday gains after a better-than-expected gain in May. A strong labor market gives the Reserve Bank of Australia room to keep interest rates high for longer.
The Chinese market was sluggish as sentiment towards China worsened following reports that the US would step up its trade scrutiny of China. The stock index and the renminbi index each fell 0.2%.
Reports this week said the US is considering broader semiconductor sanctions against Russia, which could also include third-party Chinese distributors.
Indian indices held close to their all-time highs, signalling a positive start.
