Asian Stocks Rise Slightly Ahead of Bank of Japan's Rate Decision

Market Overview and Expectations

By Gregor Stuart Hunter

Stock Market Performance

SINGAPORE, Jan 23 (Reuters) - Stocks made tepid gains in early Asian trading on Friday ahead of the Bank of Japan's latest policy meeting, at which it is widely expected to keep rates on hold.

Currency Movements

MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.4%, while the Nikkei 225 edged 0.2% higher. S&P 500 e-mini futures fluctuated between gains and losses, last trading up 0.1%. Stocks on Wall Street on Thursday extended their rebound for a second day after U.S. President Donald Trump walked back earlier threats of tariffs on European goods and ruled out taking control of Greenland by force. The S&P 500 climbed 0.5% and the Nasdaq Composite rallied 0.9%. "Markets welcomed the shift, with a rebound in risk assets and a flattening of government bond yield curves," analysts from Societe Generale wrote in a research report. "Policy uncertainty remains high, however. Further twists and turns are likely."

Impact on Precious Metals

The yen weakened 0.1% to 158.54 against the dollar ahead of the BOJ meeting, following the release of government data earlier on Friday showing Japan's core consumer prices rose 2.4% in December from a year earlier, in line with analysts' estimates.

The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, held steady at 98.329, meandering around its lowest levels of the year, after logging its biggest one-day fall in six weeks on Thursday.

Fed funds futures are pricing an implied 96% probability that the U.S. Federal Reserve will keep rates on hold at its next two-day meeting on January 28, little changed from a day earlier, according to the CME Group's FedWatch tool.

The yield on the U.S. 10-year Treasury bond was last up 0.2 basis point at 4.247%.

Precious metals markets set records as the dollar wallowed around the lows of the year. Gold rallied for a fifth day, gaining 0.3% to $4,951.47 per ounce, while silver was up 1.7% at $97.85 per ounce.

Korean stocks led gains in Asia, with the Kospi up for a third day by 1.1% after crossing the 5,000 mark for the first time on Thursday, a milestone President Lee Jae Myung had promised to reach through market reforms and tax measures to close the so-called "Korea discount".

The gains for the tech-heavy index, anchored by chipmaker Samsung Electronics, came after Intel on Thursday forecast quarterly revenue and profit below market estimates as it struggled to satisfy demand for server chips used in AI data centres, sending shares down 11% in after-hours trading. In energy markets, Brent crude futures <LCOc1> were last up 0.4% at $64.30 a barrel, steadying after Trump's softer tone towards Greenland and Iran eased fears of geopolitical risks disrupting supply. Bitcoin was last up 0.3% at $89,499.47, while ether nudged 0.2% higher to $2,948.14.

(Reporting by Gregor Stuart Hunter; Editing by Christian Schmollinger)