Asian equity markets closed mostly higher, drawing support from Wall Street’s rebound after weaker-than-expected US inflation data eased fears of prolonged monetary tightness. The constructive global tone helped offset the Bank of Japan’s decision to raise interest rates to their highest level in three decades, a move that was largely priced in and generated limited immediate market disruption. For investors across Asia, the session reflected a delicate balance between divergent central bank paths and renewed optimism around global liquidity conditions.

Japan Rate Hike Fails to Rattle Risk Appetite

The Bank of Japan raised its benchmark policy rate by 25 basis points to 0.75%, marking the highest level in 30 years and reinforcing its gradual exit from ultra-loose monetary policy. While the decision carries longer-term implications for currency markets and capital flows, equities reacted calmly. Tokyo’s Nikkei 225 rose 1.2%, led by financial stocks that stand to benefit from a steeper yield environment and improved net interest margins.

The muted response highlights investor confidence that Japan’s policy normalization will remain slow and measured. With rates still low relative to global peers, markets appear comfortable absorbing incremental tightening without pricing in a sharp shock to growth or corporate earnings.

China and Korea Track Wall Street’s Relief Rally

Elsewhere in the region, Hong Kong’s Hang Seng added 0.4%, while the Shanghai Composite rose 0.5%, reflecting improving risk sentiment tied to global macro signals rather than domestic catalysts. In South Korea, the Kospi advanced 0.5%, supported by technology-linked names as chip stocks stabilized following recent volatility in global semiconductor shares.

Investors remain selective in China-related assets, balancing modest valuation appeal against lingering concerns over growth momentum and policy follow-through. Still, the broader tone suggested a willingness to add exposure as global financial conditions show tentative signs of easing.

Taiwan Tech Strength Offsets Mixed Regional Performance

Taiwan’s benchmark index gained 0.9%, outperforming much of the region as technology sentiment improved in the wake of strong earnings signals from US chipmakers. In contrast, India’s Sensex slipped 0.2%, underscoring a more cautious stance toward emerging market risk as global investors reassess capital allocation amid shifting rate expectations.

The divergence highlights how markets tied closely to the AI supply chain remain more sensitive to US tech developments, while domestically driven markets face idiosyncratic pressures.

US Inflation Data Anchors Global Expectations

Overnight, US equities rebounded sharply, with the Nasdaq leading gains after inflation data came in softer than expected. Although headline inflation remains elevated at 2.7%, the report reinforced expectations that the Federal Reserve may retain flexibility to cut rates further if labor market conditions weaken. That prospect continues to underpin global equity valuations, particularly for growth and technology stocks.

However, investors are aware that recent US economic releases have been distorted by the government shutdown, injecting an added layer of uncertainty into policy forecasting. Markets are increasingly treating near-term data with caution, focusing instead on trend confirmation in the months ahead.

Commodities, Currencies, and Crypto Show Restraint

In early trading, oil prices edged lower, with Brent crude hovering below $60 a barrel, reflecting subdued demand expectations. The US dollar firmed against the yen following the BOJ decision, while the euro eased slightly. Bitcoin traded near $86,900, extending its recent recovery but without fresh momentum.

Looking ahead, Asian markets are likely to remain sensitive to incoming US data, central bank signaling, and technology sector confidence. The interplay between easing inflation abroad and tightening policy in Japan will shape cross-border flows, while investors continue to weigh whether the recent rebound represents stabilization or merely a pause in a more volatile cycle.