The Nikkei 225 index in Japan experienced a decline of 0.59% on Friday, responding to the Bank of Japan’s decision to maintain its policy rate at 0.5%. This move was anticipated, as it aligned with forecasts from a Reuters poll of economists. Earlier in the day, the benchmark index had reached a record high for the second consecutive session.
In tandem with these developments, the Japanese yen strengthened by 0.36% against the dollar, trading at 147.45. The Bank of Japan’s stance comes during a period in which the country’s core inflation rate has fallen to its lowest level since November 2024, reported at 2.7% for August. This marks the third consecutive month of decline in core inflation figures, which exclude the prices of fresh food and align with economists’ expectations.
The overall headline inflation also decreased to 2.7%, down from 3.1% in July, cementing a new low since November 2024. Hiroaki Amemiya, investment director at Capital Group, noted that the Bank of Japan’s decision to keep rates unchanged reflects a cautious approach amid slowing inflation and global uncertainties. He emphasized that the central bank is prioritizing stability over premature tightening, indicating its readiness to adapt to external volatility while it monitors the strength of Japan’s economic recovery.
Amemiya described the Bank of Japan’s strategy as supporting the early phases of a reflationary cycle, rather than taking a step back. Concurrently, Japan’s 2-year government bond yields surged to 0.885%, reaching the highest levels since June 2008, according to LSEG data. In broader market movements, the Topix index rose by 0.84%, while Australia’s ASX/S&P 200 climbed 0.77%. South Korea’s Kospi and Kosdaq indices remained flat at the open. In contrast, Hong Kong’s Hang Seng Index saw a decline of 0.4%, while the mainland CSI 300 edged up by 0.13%.
In a notable corporate update, Zijin Gold, a subsidiary of China’s largest gold miner, Zijin Mining, announced plans to raise approximately HK$25 billion (around $3.2 billion) through a Hong Kong IPO. The company intends to offer nearly 349 million shares at HK$71.59 each, with trading set to commence on September 29.
Meanwhile, India’s Nifty 50 index fell by 0.55%, despite Adani Enterprises, the flagship of Adani Group, gaining over 4% after India’s market regulator cleared the company and its founder, Gautam Adani, of certain misconduct allegations that had been raised by Hindenburg Research.
In overnight trading in the U.S., major equity indexes closed higher, with smaller companies benefiting significantly after the Federal Reserve hinted at an easing path for interest rates. The S&P 500 closed up 0.48% at 6,631.96, and the Nasdaq Composite rose 0.94% to 22,470.73. The Dow Jones Industrial Average gained 124 points, or 0.27%, finishing at 46,142.42. Each of these major indexes reached fresh all-time intraday highs on Thursday following a previously volatile trading session the day before, following the Fed’s rate cut announcement.
