Asian Stock Markets Rally: Japan Gains Ahead of BOJ, China Supported by Government Measures

Asian stock markets climbed on Thursday, with Japan's indices edging higher ahead of a critical Bank of Japan (BOJ) meeting. Meanwhile, Chinese markets rebounded strongly following government announcements of increased support for the equity market.

Tech Stocks Experience Mild Correction After AI Surge

Technology stocks across the region faced some profit-taking on Thursday, cooling off after Wednesday's robust rally. This previous surge was driven by an announcement from U.S. President Donald Trump and OpenAI about a massive $500 billion investment in artificial intelligence.

The AI-related news, alongside strong corporate earnings, pushed Wall Street higher, with the S&P 500 briefly hitting record highs in overnight trading. However, futures markets showed Wall Street cooling off during Asian trading hours.

Japan's Nikkei and TOPIX Extend Gains

Japan’s Nikkei 225 and TOPIX indices added 0.5% and 0.4%, respectively, continuing momentum from earlier gains. Investors are closely monitoring the BOJ, which is expected to announce a 25-basis-point interest rate hike at the end of its meeting on Friday.

Recent signs of economic resilience in Japan—marked by steady inflation and strong consumer spending—have increased market expectations of this hike. Analysts at Bank of America suggested that while a January rate hike might weigh on markets, it has largely been priced in, and the BOJ is unlikely to raise rates again until at least mid-2025.

Additionally, key Japanese economic data, including inflation and purchasing managers index (PMI) figures, is due on Friday, ahead of the central bank’s decision.

China’s Stock Market Recovers on Government Backing

In China, stocks rebounded on Thursday after suffering losses the day before. Wednesday’s decline followed President Trump’s threat to impose a 10% tariff on Chinese imports starting February 1. While this is significantly lower than the earlier proposed 60% duties, the news created uncertainties for Chinese exporters.

Market sentiment improved as Beijing announced measures to bolster equities, including directing major state insurers and commercial insurance funds to increase investments in local stocks. This move signals fresh government support for China’s struggling equity market.

China is also expected to introduce additional stimulus measures in 2025 to counter the adverse impacts of U.S. trade tariffs.

(Sources: investing.com, reuters.com, ChatGPT)