Bank of Japan nominee Kazuo Ueda stated the case for maintaining its ultra-loose monetary policies, even as inflation surges to a four-decade high
Bank of Japan nominee Kazuo Ueda stated the case for maintaining its ultra-loose monetary policies, even as inflation surges to a four-decade high AFP

Asian markets were mixed Friday, with traders still occupied by long-running interest rate worries, though Tokyo rallied after the man tipped as Japan's next central bank head made the case for keeping its ultra-loose policy.

Analysts said the realisation that the Federal Reserve will further hike borrowing costs and hold them there appears to have sunk in among investors, who were betting on a cut by year's end as 2023 began.

That has seen equities across the globe tumble this month after rallying throughout January, and observers warn this could be another bumpy year after the turmoil of 2022.

Focus now is on the release of the personal consumption expenditures (PCE) price index, the Fed's preferred gauge of inflation. That comes after a forecast-busting jobs report and data showing still-sticky consumer and wholesale inflation.

Thursday saw the release of figures showing fewer jobless claims than expected last week, which added to the view that the labour market remains robust, further complicating the Fed's task of bringing inflation down without hurting the economy.

All three main indexes on Wall Street ended on a positive note -- with the S&P 500 snapping a four-day losing run -- having swung back in the afternoon following a morning slump.

Asia struggled again in early exchanges. Hong Kong lost more than one percent and Shanghai was also down with Wellington.

But Sydney, Seoul, Singapore, Taipei and Jakarta rose.

Tokyo was the standout, returning from a long weekend and piling on more than one percent as Prime Minister Fumio Kishida's nominee to head the Bank of Japan said its longstanding monetary easing policies were "appropriate".

In a statement to lawmakers, Kazuo Ueda added: "It is necessary to keep monetary easing to support the economy and create an environment where companies can raise wages."

His comments came just after news that Japanese inflation hit a four-decade high 4.2 percent last month, though officials insist the spike is linked to temporary distortions including the war in Ukraine.

Ueda's comments saw the yen swing against the dollar in a narrow range.

"There have been high hopes that Ueda will bring a hawkish twist to the BoJ, but early remarks in his confirmation speech say anything but," said City Index's Matthew Simpson.

"Ueda blames cost-push inflation for rising prices -- driven by higher raw materials and wages -- and added that the BOJ responds to demand-driven inflation."

Tokyo - Nikkei 225: UP 1.1 percent at 27,398.78 (break)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 20,125.89

Shanghai - Composite: DOWN 0.3 percent at 3,277.90

Dollar/yen: UP at 134.74 yen from 134.70 yen on Thursday

Euro/dollar: UP at $1.0605 from $1.0600

Pound/dollar: UP at $1.2023 from $1.2017

Euro/pound: UP at 88.20 pence from 88.17 pence

West Texas Intermediate: UP 0.9 percent at $76.05 per barrel

Brent North Sea crude: UP 0.8 percent at $82.84 per barrel

New York - Dow: UP 0.3 percent at 33,153.91 (close)

London - FTSE 100: DOWN 0.3 percent at 7,907.72 (close)