Tech stocks led a broader recovery on Thursday, with the Nasdaq composite jumping 0.9%. This momentum carried over into Friday’s Asian session, where South Korea’s Kospi and Taiwan’s Taiex saw significant gains. The rebound is largely attributed to a cooling of trade tensions and surprisingly resilient U.S. economic data.
A “Goldilocks” set of reports showed that the U.S. economy grew faster during the summer than predicted, while inflation remained within a manageable range. Furthermore, the labor market remains tight, with fewer people applying for unemployment benefits. This combination is fueling hopes that the economy can handle higher interest rates for longer.
Japan’s tech-heavy indices also benefited from the Bank of Japan’s status quo. By keeping the policy rate at 0.75%, the BoJ has avoided shocking the system, though it did raise its outlook for future growth. This move provides a predictable backdrop for companies reliant on stable borrowing costs.
The “TACO” effect—market-driven policy reversals by the White House—has acted as an accidental stimulant for growth stocks. When the administration backs away from trade wars to protect “the dip,” it creates a safety net that encourages risk-taking in the technology and industrial sectors.
Looking ahead, the price of gold near $5,000 suggests that while growth is strong, the market is still pricing in significant systemic risk. Investors are cheering the current rally but keeping one eye on the bond market and the other on the next potential headline out of Washington.