(Sharecast News) - Asia-Pacific markets advanced on Friday, led by sharp gains in Japan after the Bank of Japan raised its policy rate by 25 basis points to 0.75%, the highest level since 1995, in line with expectations from economists polled by Reuters.
The move came as global risk appetite was supported by easing inflation pressures in the United States, which helped lift equities overnight.
AJ Bell head of financial analysis Danni Hewson noted that "the FTSE 100 ticked higher in early trading after lower-than-expected inflation in the US helped lift shares on Wall Street and across Asia overnight."
Investors continued to assess the implications of tighter monetary policy in Japan, where inflation had remained above the central bank's target for nearly four years.
Tokyo shares, bond yields rise after BoJ decision
Japanese equities and bond yields rose in tandem following the Bank of Japan's decision.
The Nikkei 225 climbed 1.03% to 49,507.21, while the broader Topix added 0.8% to 3,383.66.
SoftBank Group surged 6.14%, Fujikura gained 4.2% and Taisei Corporation rose 4.06%.
According to a report from Bloomberg, Fujikura had rallied about 1,400% over the past two years as global data centre expansion drove strong demand for its cables, though the company had warned that supply constraints could require further capital expenditure.
On the rates side, yields on Japan's 10-year government bond rose more than three basis points to 2.022%, the highest since 1999, while 20-year yields increased over two basis points to 2.962%, according to LSEG.
The policy backdrop highlighted the increasingly fine balance facing central banks globally, with Hewson warning that "investors have responded to the reality that we could be approaching the end of the current rate-cutting cycle."
Separately, Japan's consumer inflation eased to 2.9% in November, while core inflation was unchanged at 3%, matching forecasts.
Greater China equities close higher
Chinese equities also closed higher, tracking the broader regional advance.
The Shanghai Composite rose 0.36% to 3,890.45 and the Shenzhen Component advanced 0.66% to 13,140.22.
Kangxin New Materials jumped 10.14%, Fujian Haixia Environmental Protection Group gained 10.06% and Harbin VITI Electronics rose 10.06%.
Hong Kong stocks strengthened, with the Hang Seng Index up 0.75% at 25,690.53.
WuXi Biologics climbed 4.4% after being named to the CDP 'A' lists for both Climate Change and Water Security for 2025, reflecting progress toward its net-zero by 2050 target and water efficiency goals.
Li Auto rose 3.81% after reports it was establishing an AI research and development centre in Silicon Valley focused on advanced autonomous driving, expanding its global research and development footprint following an earlier move into Munich.
Nongfu Spring added 3.76% after HSBC upgraded the stock to 'buy' from 'hold' and raised its price target to HKD 55.60 from HKD 49.30, citing expected market share gains in bottled water and growing confidence in earnings visibility, with mid-teen growth projected for 2026.
South Korean markets ended higher, with the Kospi up 0.65% at 4,020.55.
Keyang Electric Machinery surged 29.9%, Hyundai Autoever gained 18.45% and Hanwha Systems rose 10.93%.
Hanwha Systems said it had signed a contract with Boeing to supply large-screen multifunction displays for F-15 fighter jets, marking its first export of digital avionics equipment to the United States.
The gains came despite currency volatility, with Reuters reporting that South Korea's central bank had been intervening in markets by selling dollars to smooth sharp moves in the won.
Sydney and Wellington join the global rise
Australian equities posted modest gains, with the S&P/ASX 200 up 0.39% at 8,621.40.
DroneShield jumped 11.65%, Paladin Energy rose 9.25% and Temple & Webster Group advanced 7.96%.
New Zealand stocks also closed higher, with the S&P/NZX 50 up 0.58% at 13,333.40.
Eroad gained 8.11%, KMD Brands rose 5.66% and SkyCity Entertainment Group added 4.71%.
Business sentiment in the Pacific island nation improved sharply, with ANZ's Business Outlook survey showing headline confidence rising to a net 74%, its highest level in 30 years, while the own activity outlook climbed to 61%.
Separately, New Zealand's trade deficit narrowed to NZD 163m from NZD 1.598bn previously, a roughly 90% reduction and well below expectations for a NZD 1.175bn shortfall.
Dollar strengthens, oil prices in the red
In currency markets, the dollar strengthened against the yen, rising 1.07% to last trade at JPY 157.21, while it edged 0.06% higher against the Aussie to AUD 1.5131 and rose 0.44% on the Kiwi to change hands at NZD 1.7392.
Oil prices eased, with Brent crude futures last down 0.45% on ICE at $59.55 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.55% to $55.84.
Reporting by Josh White for Sharecast.com.
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