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Weak yen lifts Japan stocks higher, Wall Street slides / Photo: Richard A. Brooks - AFP
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Weak yen lifts Japan stocks higher, Wall Street slides
A weaker yen lifted Japanese equities on Friday, while Wall Street's major indices slid in quiet holiday trading.
Seoul was an outlier in Asia with shares plunging as South Korea's political crisis deepened with a second presidential impeachment vote.
US indices slid lower at the start of trading, with the Dow shedding 0.6 percent.
"Holiday lethargy is to blame indirectly, yet a more direct weight is the modest weakness among the mega-cap stocks," said Briefing.com analyst Patrick O'Hare.
He also pointed to an increase in 10-year US Treasury bond yields to around 4.6 percent, which he noted is an increase of nearly 0.9 percentage points since the US Federal Reserve made its first interest rate cut in September.
"The Fed doesn't hold sway over longer-dated maturities like it does over shorter-dated securities, so the bump in rates at the back end of the curve is being watched with an anxious eye as a possible harbinger of a pickup in inflation and/or the budget deficit," O'Hare said.
Wall Street stocks took a knock earlier this month when the Fed indicated it would likely cut interest rates less than it had previously expected to, in part because of uncertainty tied to the stated intention of incoming president Donald Trump to raise tariffs, which could boost inflation that is already proving sticky.
In Asia, Japan's Nikkei index closed up nearly two percent, with the yen's recent weakness proving a boon for major exporters.
The yen hit 158.08 per US dollar on Thursday evening -- its lowest in almost six months -- following comments made by Bank of Japan Governor Kazuo Ueda that failed to give a clear signal on a possible interest rate increase next month.
The BoJ left borrowing costs unchanged last week and warned of uncertainty over the economic policies of US president-elect Donald Trump.
"Today, the yen looks stronger on the back of a freshly released set of stronger-than-expected data," said Ipek Ozkardeskaya, analyst at Swissquote Bank.
Recent data has showed Japan's inflation rose for a second month in December, while industrial production declined less than expected in November and retail sales came in higher than estimated last month.
Japan's government also on Friday approved a record budget for the next fiscal year, ramping up spending on social welfare for its ageing population and on defence to tackle regional threats.
In Seoul, the stock market closed down one percent after the won plunged to a nearly 16-year low of 1,487.03 against the dollar on Friday morning.
South Korea is struggling to emerge from political turbulence in the wake of President Yoon Suk Yeol's martial law declaration this month, which prompted his impeachment.
Acting President Han Duck-soo was also impeached Friday in a vote that prompted governing party lawmakers to protest with angry chants and raised fists.
South Korea's business outlook for January fell in the Bank of Korea's composite sentiment index, the biggest month-on-month slide since April 2020, according to data based on almost 3,300 firms released Friday.
In Europe, Frankfurt's DAX index rose after German President Frank-Walter Steinmeier dissolved parliament on Friday and confirmed the expected date for the early general election, emphasising the need for "political stability" in Europe's largest economy.
- Key figures around 1430 GMT -
New York - Dow: DOWN 0.6 percent at 43,076.65
New York - S&P 500: DOWN 0.6 percent at 5,999.29
New York - Nasdaq Composite: DOWN 0.7 percent at 19,871.28
London - FTSE 100: DOWN 0.1 percent at 8,129.61
Paris - CAC 40: UP 0.5 percent at 7,322.01
Frankfurt - DAX: UP 0.4 percent at 19,937.72
Tokyo - Nikkei 225: UP 1.8 percent at 40,281.16 points (close)
Seoul - Kospi: DOWN 1.0 percent at 2,404.77 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 20,116.93 (close)
Shanghai - Composite: UP 0.1 percent at 3,400.14 (close)
Euro/dollar: UP at $1.0431 from $1.0424 on Thursday
Pound/dollar: UP at $1.2560 from $1.2526
Dollar/yen: DOWN at 157.75 yen from 158.00 yen
Euro/pound: DOWN at 83.05 pence from 83.19 pence
West Texas Intermediate: UP 1.1 percent at $70.41 per barrel
Brent North Sea Crude: UP 1.0 percent at $73.60 per barrel
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(J.Torres--TAG)
