Asian share indices staged a relief rally on Friday after energy prices eased from recent peaks and stronger-than-expected corporate reports drew investors back into technology names. Tokyo also moved to steady the yen, marking the first such intervention in two years and providing temporary support for the battered currency.
Apple helped lift sentiment by beating analysts' forecasts and offering a constructive outlook for sales, though the company cautioned that chip supply constraints remain a concern. Apple shares rose 2.7% in extended trading. The upbeat reporting season extended to other large-cap US names, with Caterpillar and Alphabet each gaining 10% after surpassing expectations. Those results fed into robust US equity performance during April - the S&P 500 rose more than 10% for the month and the Nasdaq surged about 15%, its strongest monthly showing since 2020.
Heading into Friday's session, S&P 500 futures were 0.2% higher and Nasdaq futures were up roughly 0.1%. April delivered strong returns across parts of Asia as well: Japan's Nikkei rose 16% for the month, Taiwan gained 23% and South Korea almost 31%. Market holidays trimmed the pace of activity on Friday, with the Nikkei up 0.4% and Australian shares adding 0.7%. MSCI's index of Asia-Pacific shares excluding Japan edged up 0.3%.
Despite the rally, Asian markets remain highly exposed to elevated energy costs because most regional economies import a substantial share of their oil and gas. Supply flows continue to be disrupted through the strategically important Strait of Hormuz, and tensions persisted after Iran warned on Thursday it would stage "long and painful strikes" against US positions if Washington renewed attacks, while reiterating its claims over the strait.
Brent crude firmed 1.2% to $111.70 a barrel on Friday, but that remained well below Thursday's four-year high of $126.41. US crude rose 0.5% to $105.64 a barrel.
Currency action and Japan's intervention
Foreign exchange markets were active after reports that Japanese authorities intervened on Thursday to sell dollars and buy yen. That initial action pushed the dollar down about five yen to a two-month low of 155.50. However, dollar buyers returned on Friday, driving the US unit back up to 157.29, a move that suggests Tokyo may need to take further steps if it intends to firmly hold the dollar under a 160.00 yen threshold.
Tim Baker, a macro strategist at Deutsche Bank, noted that past interventions suggest the cost could be "in the tens of billions of dollars." He added that while USD/JPY appears high relative to interest rate differentials, it is low when judged against a simple model that incorporates rates, equities and oil. Baker said he was not convinced USD/JPY would keep falling or remain at current levels for long.
Japan imports essentially all of its oil, and higher crude prices are poised to significantly widen the country's trade deficit. The burst of dollar sales on Thursday also provided some relief to other currencies. The euro climbed to $1.1729 from a three-week trough of $1.1655, while the pound strengthened to as high as $1.3612, a 10-week peak. Both the euro and pound were supported in part by hawkish commentary from their central banks.
The Bank of England warned that fallout from the Iran conflict could prompt "forceful" rate increases if energy prices continued to rise, and one member of its monetary policy committee voted in favour of an immediate rate hike. European Central Bank President Christine Lagarde said policymakers were debating whether to raise rates and that data over the next six weeks would be decisive.
Analysts at Citi wrote that messaging from the ECB press conference created a "distinct perception" that governors were leaning toward a rate increase at the next meeting on June 11, and the team maintained expectations for back-to-back hikes in June and July.
US policy tone and fixed income
The Federal Reserve's hawkish shift earlier in the week led markets to abandon hopes of a rate cut this year. The change in the Fed's stance left the US 10-year Treasury yield up about 8 basis points on the week at 4.390%, though below a recent high of 4.436%.
In commodity markets, gold remained largely unchanged, quoted at $4,623 an ounce and still moving in a narrow range that has persisted for over a month.
Corporate data and investment tools
Strong results from major technology and industrial names helped sustain the risk-on tone across markets as April closed. For investors looking at individual stocks, some AI-driven tools are evaluating companies such as Caterpillar across many financial metrics to identify opportunities, claiming to measure fundamentals, momentum and valuation to flag promising risk-reward prospects.
Overall, markets welcomed the combination of easing oil pressure and encouraging corporate news, even as geopolitical tensions and potential central bank responses leave significant uncertainties for energy-importing economies and currency markets.