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Bank of Japan lifts growth outlook, holds rates

The Bank of Japan (BOJ) left its key interest rate unchanged on Friday but upgraded its economic growth forecasts, signalling confidence in a gradual economic expansion. Asian equity markets were trading higher, led by technology stocks after upbeat comments from NVIDIA on artificial intelligence demand. On Wall Street, major US indices extended gains on Thursday after stronger US growth data, even as Intel slid in after-hours trading on a weaker near-term outlook, and European stocks also rebounded as geopolitical and trade tensions eased. Safe-haven demand remained elevated, with gold setting a new record high amid heightened geopolitical risks concerning Iran.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

The Strategist BoJ
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Japan’s central bank kept its key interest rate at 0.75% on Friday, while raising its gross domestic product (GDP) growth forecast for the fiscal year ending March 2026 to 0.9% and projecting 1% growth for the following fiscal year. The BoJ expects moderate economic expansion underpinned by a virtuous cycle of wage and price gains, even as it forecasts inflation to dip below its 2% target in the first half of the year. Japan’s headline inflation slowed to 2.1% in December from 2.9% in November, its lowest level since March 2022, while still remaining above the BoJ’s 2% target for the 45th consecutive month, according to data released Friday. The yen has weakened despite recent monetary tightening as Japanese bond yields have climbed to multidecade highs amid fiscal worries and large budget and stimulus plans.

Asia stocks rise on tech strength

Japan’s Nikkei 225 was trading 0.3% higher after the central bank decision on Friday. Most other Asia-Pacific stock markets edged higher on Friday, supported by gains in technology shares after upbeat commentary from US chipmaker NVIDIA on demand for AI solutions bolstered sentiment across the sector. Korea’s Kospi was up 0.7% and Australia’s S&P/ASX 200 was 0.1% higher. Hong Kong’s Hang Seng Index was up 0.3%, whereas mainland China’s CSI 300 was trading 0.3% lower.

US stocks extend gains on Thursday

US stocks advanced on Thursday as easing geopolitical tensions and stronger-than-expected third-quarter US growth supported risk appetite, lifting the Dow Jones Industrial by 0.6%, the Nasdaq 100 by 0.8% and the S&P 500 by 0.6%. Intel shares dropped more than 11% in after-hours trading on Thursday after the US chipmaker issued softer first-quarter guidance, projecting around USD 12.2 billion in revenue versus higher market expectations and forecasting flat earnings per share.

US growth accelerates on consumer demand

US gross domestic product expanded at an annualised 4.4% pace in the third quarter, according to data released on Thursday, up from 3.8% in the second quarter and slightly above the earlier 4.3% estimate, marking the fastest growth since the third quarter of 2023. Consumer spending, which makes up about 70% of US output, increased by 3.5%, supported by higher services demand, while stronger exports and weaker imports also bolstered growth. Business investment excluding housing rose 3.2%, with part of the increase linked to artificial intelligence-related spending. In labour market data, initial US jobless claims rose to 200,000 last week, an increase of 1000 from the prior revised reading but still below market expectations, reinforcing the picture of a labour market with subdued hiring and limited layoffs ahead of next week’s Federal Reserve (Fed) policy decision.

European stocks rebound on Greenland agreement

European equities advanced on Thursday as easing tensions around Greenland and reduced trade frictions between the US and Europe supported risk sentiment, with the EuroStoxx 50 rising 1.2% and the Swiss SMI gaining 0.7%. Cyclical sectors led the move, as carmakers benefited from relief that US President Donald Trump had not revived tariff threats against Europe, helping Volkswagen shares climb 6.4%.

Gold jumps to record on Iran tensions

Gold surged to a fresh record in Asian trading on Friday, with spot prices trading around USD 4950 per ounce as heightened geopolitical tensions concerning Iran and a weaker US dollar fuelled robust haven demand. Silver and platinum also hit all-time highs, while strong year-to-date gains in precious metals have been supported by concerns over global political risks, expectations for further Fed rate cuts and a shift away from government bonds amid fiscal worries. A weaker US dollar has also supported the move. Trump’s warning that a US naval armada is heading toward Iran has reinforced fears of potential conflict in the Middle East and added a risk premium across commodity markets, with oil prices also rising and Brent and WTI futures both gaining about 0.8% on Friday.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: UK retail sales (08:00), French Purchasing Managers’ Index (09:15), German Purchasing Managers’ Index (09:30), UK Purchasing Managers’ Index (10:30), Canadian retail sales (14:30), US Purchasing Managers’ Index (15:45) and University of Michigan Consumer Sentiment Index (16:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.