Asian Stocks Decline as Markets Await US Inflation & Fed – Asia Market Wrap

Before the central bank’s interest rate announcement on Friday, Japanese stocks continued to drop this week. Following weakening US inflation statistics that lifted US markets, the majority of regional Asian stocks rose.

A third day of losses in the Topix was attributed to fears that the BoJ may reduce bond purchases at its two-day policy meeting. Following a Wednesday rise in their US peers, stocks in Australia, Hong Kong, and South Korea saw gains as lowering inflation more than offset a hawkish Fed policy decision.

Following news that the core consumer price index dropped to its lowest level in more than three years, US stocks and Treasuries saw a surge. Subsequently, the Fed revised its projection for 2025 to four rate cuts while pencilling in just one quarter point reduction this year, down from three in March.

The benchmark for South Korea’s stocks increased by 1.8% and was about to close at its highest level since February 2022. As part of ongoing talks on when to lift the trading strategy’s ban, the government announced on Thursday that it will take adjustments to its short-selling regulations into consideration. The majority of Chinese EV maker stocks increased as analysts noted that the market had anticipated the European Union’s initial announcement of tariff rises.