(Sharecast News) - Asian markets saw mixed trading on Friday, with Hong Kong stocks surging to a three-year high while Australia and New Zealand underperformed.
Investors assessed fresh inflation data from Japan alongside renewed US tariff threats from president Donald Trump.
"Japan's hotter-than-expected CPI had all the makings of a knockout punch for USD-JPY bulls, but instead it turned into a slugfest as high-ranking officials stepped in to cool the yen rally," said SPI Asset Management managing partner Stephen Innes.
"Just as traders were gearing up for a major shift in Bank of Japan expectations, finance minister Katsunobu Kato threw in a reality check - warning that rising bond yields could put severe pressure on Japan's already bloated fiscal situation."
Innes noted that Kato said an increase in long-term yields means higher interest rates and increased debt-servicing costs, which could put pressure on policy spending, given Japan's large debt-to-GDP ratio.
"That was all it took to siphon some of the bull juice out of the yen, reminding traders that the BoJ isn't operating in isolation - it's still tethered to the Ministry of Finance, which has its own set of concerns.
"That warning didn't come out of thin air - Japan's benchmark 10-year bond yields surged to 1.455%, their highest level since 2009, as markets digested the inflation shock and recalibrated expectations for the BoJ's tightening path.
"While Japanese government bonds slipped lower in price on the back of the CPI print, Kato's remarks had traders rethinking whether the BoJ would really push ahead aggressively or if they might be nudged into a more measured, summer one-and-done approach in 2025."
Markets mixed as Alibaba results push Hong Kong higher
In equity markets Hong Kong's Hang Seng Index led gains, climbing 3.99% to 23,477.92.
Alibaba shares jumped 14.56% after reporting strong quarterly earnings, driven by its cloud intelligence division and e-commerce growth.
China Unicom Hong Kong and Lenovo Group also saw double-digit gains, rising 15.72% and 15.45%, respectively.
In China, the Shanghai Composite advanced 0.85% to 3,379.11, while the Shenzhen Component outperformed with a 1.82% gain to 10,991.37.
Suzhou TZTEK Technology surged 13.57%, leading Shanghai's top gainers.
Japan's Nikkei 225 edged up 0.26% to 38,776.94 after data showed core inflation exceeding expectations in January.
The broader Topix added 0.07% to 2,736.53.
Among notable movers on Tokyo's benchmark, DeNA soared 13.89%, while Nissan Motor gained 9.47%.
South Korea's Kospi 100 slipped 0.13% to 2,651.11, with Samsung Life declining 5.45% and LS Industrial Systems down 5.32%.
In Australia, the S&P/ASX 200 dropped 0.32% to 8,296.20, dragged down by Spark New Zealand's 19.32% plunge.
Guzman Y Gomez and REA Group also saw steep losses, falling 14.25% and 11.36%, respectively.
Across the Tasman Sea, New Zealand's S&P/NZX 50 fell 0.99% to 12,752.58, as Spark New Zealand slid 18.77% on its home bourse.
In currency markets, the dollar was last up 0.05% on the yen to trade at JPY 150.39, as it advanced 0.21% against the Aussie to AUD 1.5657 and strengthened 0.07% on the Kiwi, changing hands at NZD 1.7364.
Oil prices declined, with Brent crude futures last down 1.02% on ICE at $75.70 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.13% to $71.66.
Inflation accelerates again in Japan
In economic news, Japan's inflation rate accelerated in January, reaching 4% - its highest level in a year.
Core inflation, which excludes fresh food prices, rose to 3.2%, surpassing economists' expectations of 3.1% and marking its highest level since June 2023.
The so-called 'core-core' inflation measure, which removes both fresh food and energy costs and is closely monitored by the Bank of Japan, edged up to 2.5%.
Headline inflation had remained above the central bank's 2% target for almost three years, reinforcing expectations that policymakers would closely assess price pressures before making any adjustments to monetary policy.
Reporting by Josh White for Sharecast.com.
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