The Bank of Japan (BOJ) headquarters in Tokyo, Japan, on Friday, Dec. 19, 2025. Photographer: Akio Kon/Bloomberg via Getty Images
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Asia-Pacific markets rose Friday, tracking Wall Street gains as geopolitical concerns eased and investors assessed Bank of Japan’s decision to keep interest rates steady.
Japan’s central bank held its key policy rate at 0.75% as the country prepares to go into an election in which Prime Minister Sanae Takaichi, who advocates for monetary easing and fiscal support, will face voters for the first time. Takaichi on Friday dissolved Japan’s Lower House, with the country set to go to polls in a snap election on Feb. 8.
Japan’s 40-year government bond yield slid over 4 basis points to 3.953% after hitting a record high on Tuesday.
Meanwhile, yields on shorter maturities climbed. The 10-year Japan government bond yield rose by around 2 basis points to 2.259%, while yields on the 20-year tenor inched higher by less than a basis point to around 3.204%.
HSBC said it expects the Bank of Japan’s next 25 basis point hike to come in July 2026, but warned that further yen depreciation could bring forward the timing and open the door to more rate increases.
The bank flagged April as a possible alternative, citing the release of the BOJ’s quarterly Outlook report and improved clarity on this year’s Shunto wage talks, with another 25 bps hike potentially following later in 2026.
Japan’s headline inflation rate in December slowed sharply to 2.1%, its lowest level since March 2022. Its core inflation rate came in at 2.4% on year, in line with analysts’ estimates.
Japan’s Nikkei 225 was 0.29% higher, closing at 53,846.87 while the Topix added 0.37% to 3,629.7. South Korea’s Kospi rose 0.76% to 4,990.07, while the small-cap Kosdaq was up 2.43% to 993.93.
Some tech stocks in Asia fell after shares of California-based Intel plummeted 13% in after-hours U.S. trading on its soft guidance for the current quarter, despite posting fourth-quarter earnings beat Thursday. SoftBank Group was down over 4%, while Lasertec fell nearly 6%. Tokyo Electron declined over 1%. South Korea’s SK Hynix dipped 1%.
Hong Kong Hang Seng Index added 0.41%, while the CSI 300 slid 0.45% to 4,702.50.
Australia’s S&P/ASX 200 climbed 0.13% to 8,860.1.
