Asian Stocks Hold Gains as BOJ Flags Policy Shift

Asian equities were set for weekly gains on Friday, supported by hopes of further rate cuts worldwide, though Japan’s Nikkei retreated after the Bank of Japan (BOJ) hinted at further unwinding of its ultra-loose monetary policy.

BOJ Shifts Tone, Markets React

The BOJ held short-term rates at 0.5%, but two board members voted for a hike, while the central bank also announced plans to sell exchange-traded funds (ETFs) and real-estate investment trusts (REITs). This marked a surprise move toward policy normalization.

Japan’s core inflation eased to 2.7% in August, the slowest in nine months but still above the 2% target. The Nikkei, which touched a record earlier in the session, reversed course to close 0.3% lower, trimming weekly gains to 0.9%.

The yen strengthened slightly, with the dollar down 0.3% to ¥147.51, while the 10-year JGB yield spiked to 1.635%, its highest level since 2008.

Global Central Bank Action

Investors digested a busy week of monetary policy decisions:

• Fed: Cut rates by 25 bps and projected more easing.
• Canada & Norway: Announced rate cuts.
• BoE: Held steady at 4% amid high inflation.

These moves bolstered risk appetite across global equities.

Regional Market Performance

• South Korea: KOSPI fell 0.7% but still posted a 1.3% weekly gain, extending its two-week rally to over 7%.
• China: Blue-chip shares rose 0.6%, while Hong Kong’s Hang Seng slipped 0.1% as traders awaited a Trump–Xi call later Friday, with TikTok, Huawei’s chip plans, and U.S. curbs on Nvidia chips in focus.
• MSCI Asia-Pacific (ex-Japan): Down 0.2% but still heading for a 0.6% weekly gain, near a four-year high.

Friday also saw the expiry of stock options, index options, and futures contracts, potentially amplifying volatility.

Wall Street Record Highs, Tech in Focus

Overnight, U.S. stocks rallied:

• S&P 500, Dow, Nasdaq all closed at record highs.
• Boost came from stronger-than-expected jobless claims data and Nvidia’s $5B investment in Intel, which sent Intel shares up 23% and Nvidia up 3.5%.