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Asian stocks tracked Wall Street gains on Friday, reversing a sharp market sell-off earlier this month as fears of a U.S. recession eased.
Japan's benchmark stock index, the Topix, rose 3 percent, while the tech-heavy Nikkei rose 4 percent. Stocks in Australia, Hong Kong, Taiwan and South Korea also rose.
Euro Stoxx 50 futures rose almost 0.5%, while contracts tracking the S&P 500 and Nasdaq 100 rose 0.3 and 0.4 respectively.
U.S. stocks gained momentum on Thursday as retail sales data and strong results from Walmart boosted confidence and eased fears of a recession. The S&P 500 closed 1.6% higher, erasing the index's losses in August.
“It's a combination of improving U.S. data, a stable yen and geopolitical stability,” said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management.
“Japan's economic data also showed some improvement, while South Korea and Taiwan benefited from strength in U.S. technology companies.”
Shares in Fujikura, a Japanese maker of optical connectors used in data centers that has benefited from the trend toward artificial intelligence, rose more than 10% to an all-time high.
Shares in Japanese tech giants Renesas Electronics, Disco and Tokyo Electron all rose sharply after the U.S. Philadelphia Semiconductor Index, which tracks the performance of global semiconductor companies, rose 5% on Thursday.
The yen has fallen to as low as 149 yen against the dollar after rising sharply during the market sell-off in early August.
Foreign exchange traders in Tokyo said some hedge funds had started rebuilding short-term positions in so-called yen carry trades, which take advantage of low Japanese interest rates to borrow yen and buy risky assets.The global sell-off earlier this month was exacerbated by the unwinding of yen carry trades.
“When the carry trade comes back, they're positioning with a six-hour outlook, not six months,” said a foreign exchange analyst in Tokyo.
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The Census Bureau said Thursday that U.S. retail sales rose 1% in July, the biggest increase in a year and a half and well above economists' expectations of a 0.3% increase, while Walmart raised its profit forecast and said same-store sales at its major U.S. stores rose 4.2% from a year ago.
On Friday, the yield on the benchmark 10-year Treasury note fell 0.01 percentage point to 3.90 percent, while the interest-sensitive two-year note fell 0.03 percentage point to 4.07 percent. Bond yields fall as prices rise.
Analysts said the retail sales figures bolstered investors' confidence that the U.S. economy is not heading for an imminent recession.
“While retail sales certainly beat expectations, it's becoming clear that American consumers, particularly lower-income consumers, are struggling,” said Brian Arcese, portfolio manager at Food Asset Management in New York.
“While lower inflation and strong retail sales have certainly spurred the market, we remain cautious and believe there is more value in defensive sectors such as utilities and outside the U.S.”
Additional reporting by Gregory Meyer, Harriet Klafeldt and Colby Smith in New York
