Markets loving the Fed, yen loving the BOJ

The dovish waves from Fed Chair Jerome Powell’s press conference on Wednesday continue to wash over world markets, putting Asian stocks on the cusp of a second straight weekly gain and highs not seen in well over a year.

Investor sentiment is positive and risk appetite looks strong going into the Asian open on Friday, after world stocks rose and US bond yields and the dollar fell the previous day.

The upbeat mood may be strengthened by the first quarter results from Apple after the US close on Thursday, as the world’s second most valuable company reported a smaller-than-expected decline in revenue and Chief Executive Tim Cook said he expects a return to sales growth in the current quarter.

The regional economic and corporate calendar is light on Friday – the Australian services PMI, consumer inflation from Thailand, and retail sales from Singapore are the highlights.

Perhaps the most important news for world markets on Friday, apart from the US employment figures for April, will come from Tbilisi, where the Asian Development Bank is hosting its 57th annual meeting.

Japan’s Finance Minister Shunichi Suzuki and Bank of Japan governor Kazuo Ueda are scheduled to hold a press conference on the sidelines of the meeting and if they do face reporters, they will be grilled about Japan’s apparent intervention in the currency market this week buying yen.

Japan likely intervened early on Monday and early on Thursday local time buying yen to stem its rapid decline that culminated in a fresh 34-year low of 160.00 per dollar.

Estimates suggest Tokyo spent just under USD 60 billion in the two yen-buying forays, around the same amount used in the three interventions over September and October 2022, the last time authorities waded into the market.

The targeted action, when market liquidity was particularly thin, appears to have worked, for now at least – the yen hit 153.00 per dollar on Thursday, its strongest since April 15 and up 4.5% from that historic low on Monday.

In Asian equities, meanwhile, Hong Kong stocks go into Friday’s session at a six-month high, having leaped 2.5% on Thursday thanks to gains in local technology, property, and financial stocks. Beijing’s pledge this week to step up economic support has helped underpin sentiment.

The Hang Seng is now up eight days in a row, its best stretch in five and a half years. It still has some way to go to beat that run though – in late 2018 and early 2019 the index rose 14 days in a row, and only had one ‘down’ day in 22.

Mainland China markets are closed on Friday, the last of a three-day holiday.

Here are key developments that could provide more direction to markets on Friday:

– Australia services PMI (April)

– Thailand consumer inflation (April)

– Japan finance minister, central bank governor press conference

(Reporting and Writing by Jamie McGeever; Editing by Josie Kao)