FX168 Financial News (Asia Pacific) - On Friday (September 20th), Asian stock markets continued the global stock market rally, with data indicating that the US economy may achieve a 'soft landing.' Following the Bank of Japan's announcement of unchanged interest rates, the Japanese Yen saw a short-term rally.

MSCI Asia Pacific Index rose, with gains in the stock markets of Japan, South Korea, and Australia. Global stock market indices hit new highs along with the US stock market on Thursday. #AsianMarketUpdate#

Bank of Japan remains unchanged, leading to a short-term rally in the Japanese Yen.

On Friday, the Bank of Japan maintained its monetary policy unchanged, indicating no urgency to raise interest rates as the central bank is monitoring the financial markets since the rate hike in July had previously scared off investors. Earlier data also showed that Japan's core inflation accelerated for the fourth consecutive month in August.

According to the Bank of Japan's statement, the central bank maintained the unsecured overnight call rate at about 0.25%, in line with the expectations of 53 economists surveyed by Bloomberg. The central bank also raised its assessment of consumer spending, a key driver of economic growth, and emphasized the need to monitor the financial markets.

Governor Haruhiko Kuroda's committee hit the pause button after conveying a clear hawkish stance on July 31, as this stance was believed to have triggered a global market crash in early August. While committee members expressed a willingness to continue policy normalization when data allows, they also emphasized the need to observe the market and its impact on the economy at present.

The two-day meeting took place shortly after the long-awaited policy shift by the Federal Reserve. The Fed's significant rate cut joined the easing cycle of major central banks in developed markets, including the Bank of England and the European Central Bank, highlighting the Bank of Japan's unique position as the only major central bank heading towards rate hikes.

As the Fed's actions on Wednesday intensified the momentum of global easing policies, the market's view of the Bank of Japan's future policy path is divided. Market pricing indicates that investors are less confident about another action by the central bank before the year-end compared to economists. Around 70% of economists surveyed by Bloomberg expect the Bank of Japan to raise rates again before December.

At the press conference to be held by Kazuo Ueda at the usual time of 3:30 pm, he will provide detailed explanations on the thinking behind today's decision and the outlook for inflation.

"The focus now shifts to President Kazuo Ueda's press conference," said Shoki Omori, Chief Strategist at Mizuho Bank in Tokyo. "If a hawkish stance is clearly conveyed, it is expected that the USD/JPY exchange rate will decline."

On Friday, there was little change in bond yields, while the US Dollar Index fluctuated within a narrow range.

Market enthusiasm for the Fed's delay

The number of initial jobless claims in the United States has dropped to the lowest level since May, indicating that despite slowing job growth, the labor market remains healthy. This boosts risk appetite and alleviates concerns that the Fed may be too slow in cutting rates by 50 basis points on Wednesday.

Currently, Wall Street banks have diverging views on the speed and extent of future Fed rate cuts. JPMorgan expects another 50 basis point cut in November, while Goldman Sachs predicts 25 basis point cuts at each meeting from November to June next year.

Nick Ferres, Chief Investment Officer at Singapore's Vantage Point Asset Management, stated that the stock market gains on Thursday and Friday were seen as a 'delayed frenzied reaction' to the Fed's decisions, but this reaction may taper off. 'Current valuations are overly optimistic, and if the earnings cycle disappoints, the risk-return profile will become very unfavorable.'

In other news, the European Union and China have agreed to intensify discussions to avoid imminent tariffs on electric autos, with only a few days left until the deadline.

In terms of csi commodity equity index, gold is hovering near historic highs, while oil is expected to have its largest weekly gain since April due to the impact of the USA interest rate cut.