Stocks around the world climbed on Friday as a strong performance in Japan’s equity market lifted investor sentiment and the U.S. dollar eased from recent highs, highlighting renewed confidence in risk assets and shifts in global currency dynamics.
Japan’s Nikkei 225 index soared to a record closing level, driven by gains in technology and export-oriented stocks. The benchmark ended the week with its highest finish on record, reflecting optimism about domestic corporate earnings, a solid start to the earnings season, and expectations that monetary policy will remain supportive.
Investors applauded stronger-than-expected economic data from Japan, including resilient industrial production and improving business sentiment, which together helped underpin confidence in the broader Asian market. Japanese automakers, semiconductor firms and financial stocks all contributed to the rally, pushing the index into uncharted territory for the first time in years.
“Today’s performance underscores how investor focus has shifted back to fundamentals,” said a Tokyo-based strategist. “With solid corporate results and a resilient economy, Japanese equities are drawing renewed interest.”
The positive mood in Japan rippled through other major markets. European shares closed higher, with the Stoxx Europe 600 rising as strong earnings and better economic data buoyed sentiment. U.S. stock futures also pointed to gains ahead of the opening bell on Wall Street, as investors rotated into cyclical and growth sectors.
Major indices in Asia, including South Korea’s Kospi and Hong Kong’s Hang Seng, also posted gains, reinforcing that risk appetite had strengthened across regions.
In currency markets, the U.S. dollar weakened against a basket of major currencies, reversing some of its recent strength as traders pared back safe-haven positions and repositioned toward higher-yielding assets. The dip in the dollar was especially notable against the Japanese yen and the euro.
Analysts said the softer dollar partly reflected expectations that U.S. interest rate hikes may be nearing an end, even as the Federal Reserve remains cautious on cutting rates. A weaker greenback tends to support non-U.S. equities and emerging-market assets by improving the relative appeal of foreign securities for global investors.
“The dollar pullback is a natural counter to the record-setting performance in Japan,” said a currency strategist in New York. “Global capital flows are shifting back to equities, and that’s lifting currencies outside the U.S.”
Commodity prices were mixed. Oil held steady after recent volatility, while precious metals such as gold eased as traders turned away from safe-haven bets. Industrial metals like copper posted modest gains, supported by better-than-expected manufacturing data from the region.
In bond markets, yields on U.S. Treasuries moved slightly higher, reflecting strong demand for risk assets, while Japanese government bond yields remained near recent lows as the Bank of Japan maintained its accommodative stance.
Several key themes are driving markets:
- Corporate earnings: Early reports from major companies have largely exceeded expectations, helping to lift sentiment worldwide.
- Monetary policy outlook: While global central banks remain cautious, signs of inflation cooling in some economies have eased fears of further aggressive rate hikes.
- Currency shifts: The dollar’s retreat has eased pressure on emerging-market stocks and commodities, prompting reallocations by investors.
- Economic data: Boosting confidence, recent reports from Japan and other major economies have shown resilience in key sectors.
Market strategists say the rally could continue into the short term, provided economic data remains supportive and corporate earnings hold up. However, they caution that risks remain, including geopolitical tensions, uneven global growth prospects, and potential surprises in inflation or central bank policy.
“The question now is sustainability,” a senior analyst said. “We’ve seen strong moves across major markets, but investors will want confirmation from upcoming economic indicators and earnings reports before committing to new positions.”
For now, the combination of a record-setting Nikkei, a softer dollar and broad equity gains signals a positive mood among global investors, at least through the end of the trading week.
