Global Stocks Climb as Bank of Japan Lifts Rates and U.S. Inflation Cools

BY COMFORT OGBONNA

Global equity markets moved higher on Friday after Japan’s central bank delivered a long-anticipated interest rate increase and fresh data showed U.S. inflation easing more than expected, reinforcing hopes that major central banks may be closer to cutting rates.

European markets posted modest gains in early trading. Germany’s DAX rose 0.2% to 24,241.32, France’s CAC 40 edged up 0.1% to 8,156.83, and Britain’s FTSE 100 was little changed, adding less than two points to 9,838.83. The restrained moves reflected a cautious but generally positive mood among investors as they digested recent central bank decisions and economic data.

The Bank of Japan raised its key policy rate by 0.25 percentage point, lifting it to 0.75%, the highest level in three decades. While the increase marked a significant milestone for Japan after years of ultra-loose monetary policy, the move was widely expected and largely priced into markets. Even after the hike, Japan’s benchmark rate remains well below those of other major economies.

Japanese equities reacted positively, with the Nikkei 225 jumping 1% to close at 49,507.21, leading gains across Asia. The BOJ’s decision also rippled through bond and currency markets. Japan’s 10-year government bond yield climbed above 2% for the first time since May 2006, reflecting expectations of a gradual shift away from years of stimulus. Meanwhile, the U.S. dollar strengthened against the yen, rising to 157.08 yen from 155.53 yen.

Despite initial concerns that tighter policy in Japan could unsettle global markets, investors appeared unfazed. U.S. stock futures pointed higher, with S&P 500 futures up 0.3% and Dow Jones Industrial Average futures gaining 0.1%. Analysts noted that the BOJ had clearly communicated its intentions well in advance, reducing the risk of market disruption.

Elsewhere in Asia, markets also advanced. Hong Kong’s Hang Seng Index rose nearly 0.8% to 25,690.53, while China’s Shanghai Composite added 0.4% to 3,890.45. South Korea’s Kospi climbed 0.7% to 4,020.55, and Australia’s S&P/ASX 200 gained 0.4% to 8,621.40.

Asian shares were further supported by optimism surrounding U.S. monetary policy after data showed U.S. inflation rising by a lower-than-expected 2.7% in November. The softer inflation reading strengthened expectations that the Federal Reserve could cut interest rates in the coming months, especially as signs emerge that the U.S. labor market may be cooling.

In Europe on Thursday, stocks were boosted after the Bank of England cut its key interest rate, while the European Central Bank opted to keep its rate unchanged, signaling a cautious approach as policymakers assess economic conditions.

However, some investors remain wary of drawing firm conclusions from recent U.S. data. Economic reports have been volatile following the 43-day U.S. government shutdown, which delayed the release of key statistics. The inflation report itself was postponed by more than a week, and the shutdown prevented the Labor Department from compiling full data on consumer prices and core inflation for October. As a result, many investors are looking ahead to December’s inflation report for a clearer picture of price trends.

U.S. stocks closed higher on Thursday, snapping a four-day losing streak. The S&P 500 rose 0.8%, the Dow Jones Industrial Average gained 0.1%, and the Nasdaq Composite jumped 1.4%, led by strength in technology shares.

Chipmakers and other tech companies helped drive the gains. Micron Technology surged 10.2% after posting stronger-than-expected profit and revenue for its latest quarter and issuing an upbeat outlook. Nvidia, one of Wall Street’s most influential stocks due to its size and role in the AI boom, rose 1.8%.

Still, concerns about an overheated artificial intelligence sector continue to linger. Shares of Broadcom and Oracle have fallen sharply in recent sessions amid worries that valuations may have run ahead of fundamentals. On Thursday, Oracle gained 0.9% and Broadcom added 1.1%, offering some relief after recent declines.

Another standout mover was Trump Media & Technology Group, which soared 41.9%, trimming part of its steep losses for the year. The company, which began with the Truth Social platform and later expanded into cryptocurrencies and other ventures, is now entering the nuclear power space. It announced an all-stock merger with TAE Technologies, with each company set to own roughly half of the combined business.

In commodity markets, oil prices edged lower in early Friday trading. U.S. benchmark crude slipped 16 cents to $55.84 per barrel, while Brent crude fell 21 cents to $59.61 per barrel. In currency trading, the euro weakened slightly to $1.1715 from $1.1724.

Cryptocurrencies extended their rally, with bitcoin rising 3.9% to around $88,000, continuing a strong run as investors weigh easing inflation, shifting interest rate expectations, and growing institutional interest in digital assets.