By Kevin Buckland
TOKYO (Reuters) – Asian share markets rose in thin trading on Thursday as much of the region was on holiday for the Lunar New Year, while the U.S. dollar held its ground after the Federal Reserve signaled a pause in policy easing.
The exception was the yen, which strengthened against rivals including the dollar with Japan’s central bank seen as on track to continue raising interest rates while others reduce them.
The strong yen weighed on Japanese shares, although the Nikkei managed to close with small gains. Australia’s stock benchmark edged to a record high.
The U.S. central bank held rates steady overnight as widely expected, with Fed Chair Jerome Powell saying there would be no rush to cut them again.
President Donald Trump’s policies remain a risk for the Fed’s policy outlook, and Saturday is likely to see new tariffs slapped on Canada, Mexico and possibly China as well.
“Powell was unwilling to be drawn on the potential economic impact and monetary policy response to tariffs, immigration and regulatory change, but clearly the tails of the risk distribution related to these factors are long and heavy,” said Elliot Clark, head of international economics at Westpac.
“Powell made clear in the press conference though that, while strong, the economy is not overheated.”
On Wall Street, after-the-bell earnings reports from members of the Magnificent Seven megacap tech stocks were a mixed bag.
Microsoft beat quarterly revenue estimates, while Tesla’s fourth-quarter profit margin missed expectations. Meta forecast first-quarter revenue below market estimates. Apple reports results later Thursday.
The results did little to further the debate on Chinese startup DeepSeek’s potential threat to U.S. dominance in artificial intelligence, and the big spending behind it – questions that triggered a rout in global tech stocks on Monday.
U.S. stock indexes ended slightly lower on Wednesday, and tech was the biggest drag on the S&P 500, as the benchmark slipped 0.5%.
However, the mood looks to have improved with futures pointing 0.3% higher as of 0656 GMT.
Australia’s stock benchmark closed up 0.6%, while Japan’s Nikkei ended 0.3% higher after overcoming some early weakness.
Most other major markets remained shut for holidays, including Hong Kong and mainland China.
The U.S. currency was overall steady against major peers at 107.92 on the dollar index, after ending Wednesday flat.
The euro edged down 0.1% to $1.0414 ahead of the European Central Bank’s policy decision later in the day, with traders all but certain of a quarter-point rate cut, and looking for clues to justify the market view of up to three additional reductions this year.
Sterling was flat at $1.2440.
The yen, however, strengthened about 0.5% to 154.43 per dollar with Bank of Japan Deputy Governor Ryozo Himino saying in a speech that the central bank will continue to raise interest rates if the economy and prices move in line with its forecasts.
Traders currently expect one more quarter-point increase this year, potentially as soon as July.
Oil prices ticked higher, regaining some composure after U.S. crude closed at the lowest level this year overnight, with the near-term focus on Trump’s possible tariffs on Canada and Mexico, the two largest suppliers of crude to the United States.
U.S. crude futures rose 0.2% to $72.73 per barrel. Brent crude futures added 0.1% to $76.64 a barrel.
(Reporting by Kevin Buckland in Tokyo; Editing by Shri Navaratnam and Bernadette Baum)