Defying the trend of holiday-thinned trade, Japan’s Nikkei 225 Index leaped as much as 1.15% before settling 0.09% higher at 36,897 on Friday, scaling its highest levels in 34 years. This upward surge was fueled by robust corporate earnings, a weakening yen, and a dovish outlook on Bank of Japan monetary policy. The index’s remarkable performance served as a testament to the relentless resilience of the Japanese stock market.

Amid this euphoric rally, China (SHCOMP) markets were closed in observation of the forthcoming Lunar New Year break, with a reopening scheduled on February 18. Meanwhile, Chinese banks extended a staggering CNY 4.92 trillion in new yuan loans in January 2024, a record high since comparable records began in 2004. This figures slightly surpassed the previous record of CNY 4.9 trillion set a year earlier and notably exceeded forecasts of CNY 4.5 trillion, signifying a buoyant lending environment in the country’s financial landscape.

Despite the overall bullish sentiment in the region, Hong Kong’s Hang Seng Index (HSI) experienced a dip of 0.83% as it observed a half day of trading ahead of the Lunar New Year break. In India, the SENSEX was up 0.10%, while Australia’s AS51 ascended 0.07%. Notably, the Australian dollar remained subdued around $0.65, hovering near its lowest levels in twelve weeks as investors deliberated over the latest central bank commentary.

Reserve Bank of Australia Governor Michele Bullock’s statement regarding inflation further contributed to the cautious atmosphere, as she emphasized that it’s not essential for inflation to decelerate to 2.5% before the central bank decides to lower the cash rate. With the Lunar New Year approaching, China, Taiwan, South Korea, Singapore, and Hong Kong are all heading for shortened trading weeks, leading to an anticipatory pause in the regional stock markets.

On the global front, U.S. stock futures remained steady on Friday following the previous session’s higher closure of all major indexes. The S&P 500 even ventured briefly into the historic 5,000 milestone intraday, reflecting the optimistic undertone that has been prevalent in the stock markets around the world.

As the scenario unfolds, the juxtaposition of the robust performance of the Japanese stock market with the subdued nature of the regional and global trade underscores the unique characteristics of each market and the varied influences that drive their dynamics.

It remains to be seen whether the upcoming Lunar New Year will bring renewed vigor to the markets or whether the subdued trading sentiment will persist, marking a period of contemplation and restraint.

Currencies: (JPY:USD), (CNY:USD), (AUD:USD), (INR:USD), (HKD:USD), (NZD:USD).

More on Asia

• China’s Jan inflation hits 14-year low; CPI +0.3% m/m with y/y remaining in deflation at -0.8%

• China’s top securities regulator replaced amid market rout