Asian shares rise as BOJ rate hike catalyzes markets; U.S. inflation cools and Fed outlook in focus

Asian shares moved higher on Friday after the Bank of Japan raised its key policy rate to 0.75%, the highest level in 30 years, a move that was widely expected and seen as a shift toward a gradual normalization of Japan's ultra-accommodative policy. In Tokyo, the Nikkei 225 rose about 1% to 49,507.21 as traders priced in the impact of higher rates on the economy and futures markets.

The BOJ increased the policy rate by 0.25 percentage point, lifting the benchmark to 0.75%—the highest since 1995. The move sent the Japanese 10-year government bond yield above 2% for the first time since May 2006, underscoring a shift in global funding dynamics. The U.S. dollar strengthened to about 156.36 yen from roughly 155.53 yen as currency markets absorbed the change in Japan’s monetary stance. Global investors had braced for a rate rise and appeared to take the decision in stride, with markets largely pricing in a higher-rate environment in Japan.

Across Asia, shares followed the BOJ’s signal with modest gains. Hong Kong’s Hang Seng rose about 0.8% to around 25,713.56, the Shanghai Composite added roughly 0.4% to 3,890.43, and South Korea’s Kospi climbed about 0.7% to 4,020.55. The move reflected an optimism that the recent U.S. inflation slowdown could leave room for further Federal Reserve rate cuts while the global economy continues to navigate a mix of resilient services activity and cooling goods demand.

Investors also welcomed data indicating cooling U.S. inflation, which opened the door to a potentially less aggressive path for the Fed. The latest inflation figures suggested the pace of price growth in the U.S. was easing faster than many forecasters expected, increasing the odds of rate relief later next year. Analysts cautioned that the path remains data-dependent, with employment and wage trends continuing to influence policy expectations. Abhijit Surya of Capital Economics noted that the BOJ’s rate hike “was clearly signaled ahead of time and therefore came as no surprise,” underscoring how markets had largely priced in the move in advance.

In the United States, futures markets showed a split tone. S&P 500 futures edged up about 0.1%, while Dow futures dipped around 0.2%. The contrast came as investors weighed the latest inflation readings against resilience in consumer demand and corporate earnings in a period when the market has been digesting a pullback in AI-driven exuberance. On Thursday, U.S. equities finished higher for the first time in several sessions, with the S&P 500 advancing about 0.8% to 6,774.76, the Dow Jones Industrial Average adding 65.88 points to 47,951.85, and the Nasdaq composite rising by about 313.04 to 23,006.36. Technology shares helped lift the broader market, though concerns about the sustainability of AI-related gains persisted among some investors.

Within the sector, Micron Technology jumped 10.2% after reporting stronger-than-expected quarterly results and issuing a favorable outlook for upcoming revenue and profit. Nvidia also rose, gaining about 1.8%, reflecting its ongoing influence as a bellwether in semiconductors. Other big-name tech players moved more modestly: Oracle rose about 0.9% and Broadcom gained roughly 1.1% after significant declines in recent sessions. Trump Media & Technology Group surged about 41.9% as it disclosed a merger with TAE Technologies, moving into the nuclear sector; the two entities will own roughly half of the combined business.

Commodity markets also shifted. U.S. crude oil traded around $55.84 per barrel, down 16 cents, while Brent crude slipped to about $59.61 per barrel. The euro traded near $1.1715, and bitcoin climbed roughly 3.8% to around $88,000, underscoring ongoing volatility in cryptocurrencies alongside traditional assets.

The breadth of activity across markets illustrates a global trading day where the biggest headline—the BOJ rate hike—set a backdrop for risk assets to trade in a slightly higher, data-dependent rhythm. The U.S. inflation slowdown remains a central driver for Fed expectations, suggesting policymakers could maneuver toward rate reductions if the labor market cools further and price pressures continue to ease. While the path remains uncertain, investors diagonalize between the potential for higher returns in equities and the need to manage the risk of renewed volatility as global monetary authorities recalibrate policy amid shifting economic data.

In currency markets, the yen’s reaction to the rate decision amplified the cross-asset moves throughout the session. Investors will monitor next week’s U.S. inflation update and upcoming Fed statements for clues on whether a late-year tilt toward tighter or looser financial conditions is warranted. Meanwhile, equity traders will continue to assess how AI-driven growth narratives influence earnings outlooks and capital allocation, even as some market participants warn of a possible correction after a recent stretch of rapid gains. The overarching narrative remains that central banks are moving in a carefully choreographed fashion toward more normal policy settings, even as growth remains uneven across regions and sectors. The topic label for coverage remains Business & Markets.