(Bloomberg) — The yen strengthened Friday as Tokyo inflation data exceeded estimates. Asian stocks fluctuated.
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Shares in Australia and Japan fell, while South Korea’s declined most in the region as the surprise interest-rate cut by the central bank on Thursday shifted investor focus to slowing economic growth. Stocks in mainland China rose. US markets were closed Thursday for the Thanksgiving holiday.
MSCI’s regional equity gauge was on track for a second straight monthly loss.
The yen rose to the highest level in more than a month against the greenback, strengthening past the 150 . The dollar slipped against major currencies, with an index of greenback strength headed for its first weekly decline in two months. Treasury yields fell as cash trading in Asia resumed.
The moves underscored the muted appetite for risk across global markets during a week that is typically marked by lower volumes due to the US holiday. Month-end positioning may also prompt some investors to rebalance portfolios after a record high for American stocks this week. US equity futures climbed in Asia.
Gains for Japan’s currency were helped by Tokyo inflation data that showed prices rose more than expected on a headline basis, but broadly in line with estimates once fresh food and energy were excluded. Swaps market pricing indicates a more than 60% chance the Bank of Japan will raise interest rates when it meets next month.
“The CPI report will probably strengthen the BOJ’s conviction that inflation momentum is building, with its 2% target looking increasing secure,” said Taro Kimura, an economist with Bloomberg Economics.
Japan may also delay a decision on raising taxes to help cover rising defense spending, a senior ruling coalition official said.
Australian bond yields rose after Reserve Bank Governor Michele Bullock said core inflation remains too high and pushed back on expectations of near-term rate cuts. The Australian dollar was slightly stronger against the greenback Friday.
Elsewhere in currency markets, Brazil’s real tumbled to a record low on disappointment over a government plan to cut spending, while Mexico’s peso rallied amid thin trading due to the US holiday.
European Stocks
In Europe, stocks snapped two days of declines, with technology leading the advance amid hopes that US curbs on chip equipment sales to China may prove lighter than feared. The US is considering measures on sales of semiconductor equipment and AI memory chips to China that would stop short of stricter limits previously under discussion, Bloomberg News reported.
