Asian shares to end big central bank week with gains, Nikkei hits record

"With the past week's central banks decisions in the rear-view mirror, it's clear that no one's been comfortable to surprise," one strategist says

Asian shares are set to end a big central week in positive territory, buoyed by hopes of more monetary stimulus around the world, while the Nikkei notched a record aided by expectations the Bank of Japan would again skip a rate hike.

This week, central banks in the United States, Canada and Norway cut interest rates while the Bank of England held steady. The Bank of Japan is widely expected to keep its easy monetary policy unchanged on Friday amid domestic political uncertainties.

"With the past week's central banks decisions in the rear-view mirror, it's clear that no one's been comfortable to surprise," said James Rossiter, head of global macro strategy at TD Securities.

"Ongoing uncertainty is clearly cutting policymakers' risk appetites, though we expect cuts from many central banks at their next meetings."

On Friday, Japan's Nikkei rallied 0.7% to hit another record high ahead of the BOJ meeting. That brought the weekly gain to 2% after a 4% jump the previous week. The Japanese yen was steady at 148 per dollar.

Data showed Japan's core inflation ran at 2.7% in the year to August, marking the slowest pace in nine months, although it was still above the central bank's 2% target.

"Given political uncertainty, a BOJ rate hike may have to await the outcome of the LDP leadership elections on the 4th of October," said Chang Wei Liang, a FX & credit strategist at DBS Group.

He added that comments from LDP candidate Sanae Takaichi, who holds a press conference later on Friday to explain her policies, could weigh on the yen somewhat given her bias towards accommodative fiscal and monetary policy.

South Korea lost 0.4% but still hovered near a record level. It was up 1.5% for the week, bringing the total gain over the past two weeks to almost 8%.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3% on Friday but is still set for a weekly rise of 0.5%, hovering not far from its four-year tops.

Friday is also the day when stock options, index options and stock index futures all expire on the same day, leading to increased trading activity and potential market volatility. Both Nasdaq futures and S&P 500 futures were little changed.

Chinese blue chips inched up 0.2%, while Hong Kong's Hang Seng eased 0.3% ahead of an expected phone call between President Donald Trump and his Chinese counterpart Xi Jinping.

There is a lot for investors to mull leading into that meeting with a deal on TikTok possibly close, China's Huawei outlining its chip plans, Beijing ordering tech firms not to buy Nvidia's AI chips.

Overnight, benchmark S&P 500, the Dow and the Nasdaq all closed at record highs, helped by better jobless claims data and news that Nvidia will invest $5 billion in the struggling U.S. chipmaker Intel.

Intel shares surged 23%, while Nvidia gained 3.5%.

In the foreign exchange markets, the dollar rebounded after the Fed's first cut in nine months. The dollar index held at 97.42, finding some support after plunging to a multi-year low of 96.224 just on Wednesday.

The pound held losses at $1.3542, having slid 0.6% overnight as the BOE kept rates unchanged at 4%. The dollar gained 0.9% on the Norwegian crown NOK=D3 after the Norges Bank cut rates and signalled rates could continue to fall.

In the bond market, 10-year Treasury yields held at 4.1102%, having edged up 3 basis points overnight.

In commodity markets, oil prices were steady on Friday, after settling lower in the previous session. U.S. crude CLc1 was little changed at $63.60 a barrel, while Brent was flat at $67.47.

Spot gold prices held at $3,647 an ounce.