Aerial view of Mt. Fuji, Tokyo Tower and modern skyscrapers in Tokyo on a sunny day.
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Japan equities and bond yields jumped after the central bank raised its policy rate to a three-decade high. The decision comes as inflation has stayed above its target levels for nearly four years now.
The Bank of Japan raised benchmark rates by 25 basis points to 0.75%, their highest level since 1995, and in line with expectations of economists polled by Reuters.
Japan’s consumer inflation rate dropped to 2.9% in November, government data showed Friday. Core inflation, which strips out prices of fresh food, remained unchanged from 3% in October, and came in line with Reuters-polled economists’ average estimate.
Japan’s Nikkei 225 advanced 1.03% to close at 49,507.21, while the Topix was 0.8% higher, ending the trading day at 3,383.66. The Japanese yen weakened 0.33% to 156.06 against the greenback.
Yields on the 10-year government bond rose over 3 basis points to 2.022%, the highest since 1999, data from LSEG showed. Yields on the 20-year rose over 2 basis points to 2.962%.
“The government’s acceptance of interest rate hikes seems to be a move centered on the Ministry of Finance, which is concerned about the depreciation of the yen,” Ken Matsumoto, Japan macro strategist at Credit Agricole-CIB, wrote in a note after the decision.
Matsumoto added that if the yen depreciates significantly during the year-end and New Year holidays when liquidity is low, the Ministry of Finance will “actively intervene in the exchange rate.”
South Korea’s Kospi added 0.65% to 4,020.55 and the small-cap Kosdaq jumped 1.55% to 915.27.
Reuters reported that South Korea’s central bank is intervening in currency markets by selling dollars to limit declines in the won, according to Yoon Kyoung-soo, director general of the Bank of Korea’s international department. He added that authorities are conducting “smoothing operations” to counter sharp, one-sided moves driven by severe supply-demand imbalances.
The won has recently been trading around its weakest since 2009, and was last at 1,479 against the greenback.
Australia’s S&P/ASX 200 climbed 0.39% to 8,621.4.
Hong Kong’s Hang Seng index rose 0.59%, while the mainland CSI 300 was up 0.34% to close at 4,568.18.
India’s Nifty 50 rose 0.5%. Shares of ICICI Prudential AMC, one of India’s largest asset management companies, rose as much as 20% in their trading debut Friday, following a 106 billion rupees ($1.17 billion) initial public offering.
Overnight in the U.S., the S&P 500 snapped a four-day slide Thursday, boosted by lighter-than-expected inflation data that brightened the outlook for lower interest rates in 2026 and blowout guidance from chipmaker Micron Technology.
The broad market index jumped 0.79% to settle at 6,774.76, while the Nasdaq Composite advanced 1.38% to 23,006.36. The Dow Jones Industrial Average gained 65.88 points, or 0.14%, to end the day at 47,951.85.
— CNBC’s Lim Hui Jie, Sean Conlon and Pia Singh contributed to this story.
