Asia Market News: Equity Markets Rally on Hopes of Fed Rate Cut and BoJ Pivot

Asian Equity Markets Enjoy a Positive Friday Morning Session

It was a risk-on Friday morning session for the Asian equity markets. The Nikkei and ASX 200 were up 0.80% and 0.85%, respectively. Notably, the ASX 200 climbed to a new all-time high, while the Hang Seng Index led the ASX 200 and the Nikkei, gaining 1.34%.

Investor hopes of an H1 2024 Fed rate cut drove demand for riskier assets. According to the CME FedWatch Tool, the probability of a 50-basis point June Fed rate cut increased from 10.2% (Feb 29) to 17.3% (Mar 8). The chances of a 25-basis point June Fed rate cut rose from 52.8% to 55.0% over the same period.

The Hang Seng Index rebounded from the Thursday pullback despite no fiscal stimulus measures from Beijing. Nonetheless, investors remained hopeful lawmakers would introduce more measures to support the economy.

Notably, the Nikkei brushed aside a stronger Yen, with the bulls eyeing a return to 40,000.

Tech stocks contributed to the Friday gains across the Asian equity markets. The S&P ASX All Technology Index (XTX) was up 0.97%, with the Hang Seng Tech Index (HSTECH) up 0.83%. On the Nikkei, Tokyo Electron Ltd. (8035) and Softbank Group Corp. (9948) were up 3.02% and 2.30%, respectively.

Bank of Japan Pivot Plans Intact Despite Slump in Household Spending

In Japan, private consumption figures failed to impact bets on an April Bank of Japan pivot from negative rates. Household spending tumbled 2.1% month-on-month in January. Economists forecast household spending to increase by 0.4%.

Household spending unexpectedly fell despite Wage-related data from Thursday beating expectations. Average cash earnings increased by 2% after a 1% increase in December.

However, the USD/JPY brushed aside the household spending figures. The markets blamed one-offs on the slump in spending, limiting the impact on the USD/JPY and BoJ policy expectations.

On Friday, the USD/JPY was down 0.06% to 147.955. Rising bets on an H1 2024 Fed rate cut and April BoJ pivot from negative rates briefly sent the USD/JPY pair to the 147.500 handle.

The AUD/USD had an uneventful morning despite the risk-on sentiment. The AUD/USD was up 0.01% to $0.66208. Investors are likely holding out for the US Jobs Report, with the bulls eyeing a return to the $0.67 handle.