Investing.com– Asian stock markets rose on Friday, led by a sharp rebound in South Korean shares, while investors digested the Bank of Japan’s decision to leave interest rates unchanged and a fresh batch of regional economic data.
The regional rally followed a strong session on Wall Street, where Microsoft () and Amazon () delivered earnings that reinforced optimism over sustained AI investment, lifting the and broader technology sector.
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BOJ keeps rates steady as expected
The Bank of Japan kept unchanged on Friday, maintaining its short-term policy rate at 1.0% as policymakers judged the economy remained on a moderate growth path despite headwinds from higher oil prices and geopolitical tensions in the Middle East.
The central bank voted 8-1 to keep the uncollateralized overnight call rate at around 1.0%, with board member Hajime Takata dissenting in favor of raising the rate to 1.25%, citing growing upside risks to inflation from overseas demand shocks and changing global financial conditions.
The central bank said risks to inflation remain skewed to the upside and warned policymakers must pay close attention to the impact of Middle East developments, foreign exchange moves and global AI demand on Japan’s economy and prices.
Investors awaited Governor Kazuo Ueda’s remarks, after Japanese authorities intervened in the currency market this week to stem the yen’s slide to four-decade lows.
Japan’s climbed nearly 4%, supported by gains in semiconductor-related stocks.
The BOJ’s decision came after data released earlier on Friday showed in Japan’s capital accelerated more than expected.
Separately, data showed Japan’s rose 1.3% in June from the previous month, beating expectations for a 1% increase.
rose 0.5% year-on-year in June, well below forecasts for a 3.1% gain, pointing to weak consumer spending.
rebounds sharply as chipmakers rally
South Korea’s KOSPI ended 18% higher on Friday after suffering steep losses for three consecutive sessions. Heavyweight chipmakers
Samsung Electronics () and SK Hynix () rebounded strongly as upbeat quarterly results from Microsoft and Amazon renewed confidence in AI-related spending.
The rally helped stabilize sentiment after a week dominated by concerns over AI valuations and rising competition from Chinese chipmakers.
Despite Friday’s gains, the KOSPI remained on track for a 22% monthly drop amid profit-taking and AI-related worries.
Chinese shares were also higher, with the index rising 1%, and the blue-chip Shanghai Shenzhen adding 1.3%.
Hong Kong’s edged 0.2% lower, although the sub-index was higher.
China PMI slips into contraction in July
Data on Friday showed that China’s unexpectedly slipped back into contraction in July, while the also weakened, highlighting persistent headwinds facing the world’s second-largest economy.
Investors continued to watch for signs of additional policy support from Beijing.
Elsewhere, Australia’s S&P/ASX 200 edged 0.1% higher, while Singapore’s fell 0.8%.
India’s edged 0.2% higher by midday.
Investors also kept a close watch on geopolitical developments after continued hostilities between the United States and Iran heightened concerns over potential energy supply disruptions.