Asian stock markets experienced a welcome recovery Friday as technology sector strength and retreating oil prices boosted investor confidence, while Japan took unprecedented action to support its struggling currency.
Technology giant Apple led the charge by surpassing earnings expectations and offering positive sales projections, despite cautioning about potential semiconductor supply issues. Apple’s stock jumped 2.7% in after-hours trading, joining impressive gains from Caterpillar and Alphabet, both of which exceeded analyst predictions by 10%.
The technology rally helped drive remarkable April performance across major indices. The S&P 500 posted gains exceeding 10% for the month, while the Nasdaq soared 15% in its strongest showing since 2020. Friday’s futures trading showed continued momentum with S&P 500 contracts up 0.2% and Nasdaq futures gaining 0.1%.
Asian markets also celebrated an exceptional April, with Japan’s Nikkei climbing 16%, Taiwan advancing 23%, and South Korea surging nearly 31%.
Despite market holidays limiting Friday’s trading activity across Asia, the Nikkei managed a 0.4% increase while Australian markets added 0.7%. The MSCI Asia-Pacific index excluding Japan edged up 0.3%.
Energy concerns continue to weigh on Asian economies, which depend heavily on imported oil and gas. Current disruptions through the strategically important Strait of Hormuz remain a significant worry for the region.
Iran escalated tensions Thursday by threatening “long and painful strikes” against U.S. positions if Washington launches additional attacks, while reasserting its territorial claims over the strait.
Oil markets responded with Brent crude rising 1.2% to $111.70 per barrel, though this remains well below Thursday’s four-year high of $126.41. U.S. crude increased 0.5% to $105.64 per barrel.
Currency markets saw dramatic action after Japanese officials reportedly intervened Thursday by selling dollars to purchase yen, marking the country’s first such intervention since 2022. The move initially sent the dollar tumbling five yen to a two-month low of 155.50.
However, dollar buyers returned Friday, pushing the currency back up to 157.29 yen, suggesting Tokyo may need additional intervention to establish a firm barrier at the 160.00 yen level.
“The cost is likely to be in the tens of billions of dollars based on history,” commented Tim Baker, a macro strategist at Deutsche Bank, discussing the intervention’s scale.
“We’re not convinced USD/JPY will keep falling, or even stay here for long,” Baker explained. “The cross may well be high relative to rates, but it’s actually low relative to a simple model that includes rates, equities and oil.”
Japan’s complete dependence on oil imports means rising crude prices will significantly expand the nation’s trade deficit.
The dollar selling indirectly strengthened the euro to $1.1729, moving it away from a three-week low of $1.1655. The British pound gained to a 10-week high of $1.3612.
Both European currencies received support from aggressive central bank messaging.
The Bank of England cautioned that Iran conflict fallout could trigger “forceful” interest rate increases if energy costs continue climbing, with one board member already advocating for immediate rate hikes.
European Central Bank President Christine Lagarde indicated officials are considering rate increases, noting that upcoming six weeks of economic data will determine their decision.
“The messages conveyed during the press conference leave us with a distinct perception that the consensus among governors is that they will hike policy rates at the next meeting on June 11,” Citi analysts wrote in a research note.
“We find no reason to alter our expectation of back-to-back rate hikes in June and July.”
This follows the Federal Reserve’s hawkish stance Wednesday, which eliminated market expectations for any U.S. rate cuts this year.
The policy shift left U.S. 10-year Treasury yields up 8 basis points for the week at 4.390%, though below the recent peak of 4.436%.
In commodity trading, gold remained unchanged at $4,623 per ounce, continuing its narrow trading range that has persisted for over a month.
