Nikkei 225 Rallies as Yen Falls to 144.27 vs Dollar on BoJ Growth Forecasts

US Markets Juggle Recession Jitters and Fed Pivot Hopes as Asia Opens Cautiously

US equity markets ended mixed on Wednesday, April 30, as recessionary fears intensified at month-end. The Nasdaq Composite Index slipped 0.09%, while the Dow and the S&P 500 posted gains of 0.35% and 0.15%, respectively, extending their winning streaks to seven sessions.

Softer inflation figures fueled expectations of a more dovish Fed rate path, countering concerns over weak US GDP and labor market data.

Upbeat corporate earnings draw interest after the closing bell. Meta Platforms (META) and Microsoft (MSFT) beat earnings estimates, rallying 5.36% and 6.93%, respectively, in after-hours trading.

Recession Risks Rise Despite Easing Inflation

The US economy contracted by 0.3% quarter-on-quarter in Q1 2025 after expanding 2.4% in Q4 2024. Rising risks of a US recession impacted risk sentiment. Labor market data added to the negative sentiment. The ADP reported a 62k rise in employment in April, down from 147k in March.

However, inflation showed signs of easing. The Core PCE Price Index rose 2.6% year-on-year in April, down from 3% in March, boosting bets on multiple Fed rate cuts. Expectations of a more dovish Fed rate path countered recession jitters, supporting a market recovery. Robust personal spending early in Q2 2025 further supported the appetite for risk assets, helping offset broader recession concerns.

Hopes for a more dovish Fed rate path and upbeat earnings set a cautiously optimistic tone for the Asian session on Thursday, May 1.

Bank of Japan Shifts Tone Amid Trade Headwinds

On May 1, the Bank of Japan maintained interest rates at 0.5%, aligned with market expectations. However, Trump’s tariff policies forced the BoJ to lower its growth and inflation forecasts, signaling a less hawkish policy stance. Officials noted that a weakening economy could weigh on underlying inflation.

The Yen tumbled as investors digested the BoJ statement, with USD/JPY rallying 0.86% to 144.272 during the Asian session.

Nikkei 225 Rallies as the Yen Tumbles

Japan’s Nikkei 225 advanced 1.14% on Thursday morning, boosted by a weaker Yen. Yen depreciation could cushion the impact of tariffs by increasing competitiveness and boosting corporate earnings.

Nissan Motor Corp. (7201) gained 0.64%, while Softbank Group Corp. (9984) rallied 2.04% on the back of upbeat US tech earnings.

ASX 200 Extends Rally, Miners Weigh on Gains

Australia’s ASX 200 ended the Thursday session up 0.24%, extending its winning streak to six sessions. Tech stocks led the gains as investors reacted to overnight earnings reports. However, rising fears of a US recession fueled demand jitters, weighing on mining and oil stocks.

• The S&P/ASX All Technology Index rallied 2.28%.
• Meanwhile, BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) fell 0.94% and 1.02%, respectively. Iron ore spot prices fell 0.61% on April 30 and extended their losses in the Asian session, weighing on mining stocks.
• Woodside Energy (WDS) tumbled 2.6% after WTI oil prices plunged 3.28% overnight.

Hang Seng Index and China Markets Post Monthly Losses

Hong Kong and Mainland China’s equity markets posted heavy losses in April as tariffs and limited policy support from Beijing weighed on sentiment. The Hang Seng Index fell 4.33% in April, while the CSI 300 and Shanghai Composite Index ended the month down 3% and 1.7%, respectively.

The Hong Kong and Mainland China markets were closed on May 1, with trading set to resume on Friday, May 2.

Outlook: Trade Tensions and Central Bank Signals in Focus

Investor sentiment will remain closely tied to trade developments, Beijing’s stimulus plans, and major central bank cues.

Progress toward trade deals, fresh stimulus from Beijing, and dovish central bank guidance may boost risk sentiment. Conversely, rising US-China tensions, Beijing’s silence on stimulus, and hawkish central bank rhetoric could impact risk assets.

With tariff uncertainty lingering, market participants may benefit from strategies that adapt to shifts in monetary policy and trade dynamics. For more insights, refer to our latest market coverage.