Most Asian stocks moved in a flat-to-low range on Friday as investors digested the outlook for higher U.S. trade tariffs and interest rates, while Chinese markets pulled back further from a stimulus-driven rally. 

Japanese markets moved little in catch-up trade, as mildly stronger-than-expected consumer inflation data lifted the prospect of more interest rate hikes by the Bank of Japan. 

Regional markets tracked a middling overnight session on Wall Street, as mixed signals from the Federal Reserve, persistent threats of more trade tariffs and growing concerns over a U.S. economic slowdown kept traders to the sidelines. 

U.S. stock index futures rose slightly in Asian trade, as Wall Street still attracted some bargain buying after recently sliding to six-month lows. But investors remained largely on edge over more trade tariffs, with President Donald Trump recently signaling that his April 2 deadline for reciprocal tariffs remained. 

Japanese shares drift higher after CPI data 

Japan’s Nikkei 225 and TOPIX indexes rose 0.1% and 0.7%, respectively, on Friday. Trade resumed after a market holiday on Thursday. 

Consumer price index inflation data read slightly higher than expected for February, furthering the BOJ’s expectations for a virtuous cycle and keeping bets of more rate hikes by the central bank squarely in focus.

While headline inflation did cool from the prior month, a key gauge of underlying inflation that is watched by the BOJ rose further above the central bank’s 2% annual target. 

The print came just days after the BOJ kept rates unchanged, but signaled that it expected inflation to remain sticky this year. Analysts expect the BOJ to next hike rates in May, after a 25 basis point raise in January. 

Chinese stocks fall further as stimulus, AI rally cools 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.3% and 0.2%, respectively, while Hong Kong’s Hang Seng index sank 0.6%. All three indexes were hit with some profit-taking this week after a strong run-up so far this year, amid increasing optimism over more stimulus measures in the country. Chinese technology stocks, especially those listed in Hong Kong, benefited greatly from increased interest in China’s artificial intelligence capabilities. 

This saw the Hang Seng hit hard by profit-taking after it soared to an over three-year high this week on strength in major tech stocks. These stocks were the biggest weight on the index on Thursday and Friday.

Focus is now on Beijing’s plans for more stimulus measures, after the government recently outlined measures aimed at boosting private consumption. 

Broader Asian markets moved little amid a dearth of new cues, while caution over the global economy kept traders to the sidelines. Australia’s ASX 200 rose 0.4%.

Singapore’s Straits Times index fell 0.1%, while South Korea’s KOSPI added 0.2%.

Sentiment towards South Korea was pressured by anticipation of a ruling on impeached President Yun Suk Yeol, which has now been delayed by more than three weeks. 

Futures for India’s Nifty 50 index pointed to a flat open, as a recent rebound to five-week highs now appeared to be cooling.