Asian stocks rise as tech tracks bumper US earnings; BOJ underwhelms

Investing.com-- Most Asian stocks rose on Friday, buoyed by gains in the technology sector as investors cheered strong earnings from Microsoft and Alphabet, although anticipation of more cues on interest rates kept sentiment in check. 

Japanese stocks picked up pace after mixed signals from the Bank of Japan cast doubts over just how much capacity it had to raise interest rates further.

Regional markets tracked gains in U.S. stock index futures, which rose sharply after stronger-than-expected earnings from tech giants Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOGL). The two stocks surged in aftermarket trade, with Alphabet hitting a record high.

Gains in U.S. tech stocks largely overshadowed a weak overnight close on Wall Street, following softer-than-expected gross domestic product data and a higher GDP price index. Focus was now on PCE price index data- the Federal Reserve’s preferred inflation gauge- which is due later in the day. 

Japan’s Nikkei 225 rise as BOJ offers dovish cues

Japan’s Nikkei 225 index added 0.7%, while the broader TOPIX rose 1%, with both indexes extending gains after the BOJ.

The central bank kept interest rates steady as widely expected. But while it forecast higher inflation in the coming years, the central bank also lowered its growth forecasts for the Japanese economy.

The weaker growth forecasts raised concerns over just how much headroom the BOJ will have to raise interest rates further, after a historic hike in March.

Softer-than-expected consumer price index inflation data from Tokyo added doubts over the BOJ. Inflation in Japan’s capital- which acts as a bellwether for the country- slid below the BOJ’s 2% annual target in April.

Asian tech upbeat following strong US earnings 

Tech-heavy Asian bourses were the best performers on Friday.  South Korea’s KOSPI rose 1%, while Hong Kong’s Hang Seng index added 2%. 

The Hang Seng also hit a five-month high on gains in oil and gas giant CNOOC Ltd (HK:0883), after the firm clocked stronger-than-expected quarterly earnings.

Positive earnings from the U.S. tech giants fueled hopes that demand for artificial intelligence- which was a key driver of the earnings beat- will continue to buoy tech valuations in the coming quarters.  Gains in tech also saw China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rise 0.8% and 0.6%, respectively. 

India’s Nifty 50 rose slightly, although traders were wary of heightened volatility in Indian markets as the 2024 general elections began.

Australia’s ASX 200 was the sole underperformer for the day, falling 1.3% in catch-up trade after a holiday on Thursday. A 4.4% drop in mining giant BHP Group Ltd (ASX:BHP) pressured the index, after the miner made a nearly $39 billion bid for smaller peer Anglo American PLC (LON:AAL).

Australian stocks were also spooked by data showing an increase in producer price index inflation over the first quarter, which heralds higher-for-longer interest rates in the country.