Markets in Japan and Australia recorded advances on Thursday after a roller-coaster trading day on Wall Street the day before, after numbers released showed contraction in the United States economy for the first quarter of 2025. The dismal economic warnings sent investors scrambling for cover that a recession may hit the United States and made waves across financial markets.
In spite of the uncertainty, Japan’s Nikkei 225 index rose by 1.13%, closing the day at 36,452.30, and the broader Topix index rose by 0.46%, closing at 2,679.44. Meanwhile, in a move that was widely expected, the Bank of Japan (BoJ) decided to maintain its key interest rate at 0.5% in its two-day monetary policy meeting. The decision was made in a unanimous vote and was a reflection of the BoJ’s conservative approach as it watches inflation and growth in the region.
Following the BoJ’s announcement, 10-year Japanese Government Bonds (JGBs) yields declined by 5.4 basis points to 1.259%. Likewise, 20-year JGBs also declined slightly by 1.5 basis points, closing at 2.184%. The Japanese yen weakened 1.06% to 144.58 per dollar as investors balanced the impact of the BoJ’s position on subsequent economic growth.
At the same time, Australian stocks also rallied, with the S&P/ASX 200 benchmark index increasing 0.24% to 8,145.60 at close. This is the sixth straight session of upward movement for the index, preceding Australia’s elections on Saturday. The investors remained optimistic despite prevailing global economic worries, thanks to Australia’s robust trade surplus and favorable economic indicators.
In the latest report from the Australian Bureau of Statistics, Australia’s trade surplus in March jumped to 6.9 billion Australian dollars ($4.42 billion), a large rise from the revised surplus of 2.85 billion Australian dollars in February. This figure surpassed the 3.9 billion Australian dollar surplus predicted by economists in a Reuters poll. The widening of Australia’s trade surplus occurred as iron ore exports rebounded from earlier weather interruptions, and gold shipments benefited. Australian exports increased by 7.6% year on year, with imports falling by 2.2%.
With the overall bullish tone in Japan and Australia, most of Asia was subdued with Labor Day holidays. A number of markets, including Hong Kong, South Korea, China, and India, continued to be shut on Thursday, restricting trading activities in the entire region. The muted trading landscape in Asia differed from the build-up momentum on the U.S. futures market, which saw a rebound after two of the so-called “Magnificent Seven” stocks released strong earnings figures — Meta Platforms and Microsoft.
In after-hours trading on the U.S., Meta posted a gain of over 4% after more-than-anticipated revenue performance in the first quarter of 2025. Microsoft too reported strong earnings, with its stock rising 8% after it beat both revenue and profit estimates in its fiscal third-quarter report. Strong earnings from its Azure cloud segment and positive forward-looking guidance contributed to a positive mood around the technology giant.
U.S. stock indexes were able to continue their upward trend, even with the volatility of the previous day. The S&P 500 closed up modestly by 0.15% at 5,569.06, its seventh day of gains in a row. The Dow Jones Industrial Average rose by 141.74 points, or 0.35%, closing at 40,669.36, while the Nasdaq Composite closed flat at 17,446.34.
While the world economy treads the fears of possible downturns, how the major world markets, especially those in Australia and Japan, perform will become pivotal in deciding investor mood for the next several weeks.
