Japanese shares hit 34-year highs on Friday and strong earnings had the S&P 500 at record close, while oil prices were set for a sharp weekly rise on Israel’s rejection of a ceasefire offer from Hamas.

Trade was lightened in Asia by the closure of Chinese markets for the Lunar New Year break and by a shortened session in Hong Kong.

The Hang Seng, however, slumped 2% in the morning, with traders frustrated by a long and so far fruitless wait for Beijing to unleash stimulus or support for China’s sliding markets.

The Nikkei rose 1%, aided by a retreating yen that traded near its weakest in two months at 149.37 per dollar in the Asia morning. [.T]

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat and heading toward a 0.7% weekly rise to notch its longest weekly winning streak since June. The S&P 500 touched the 5,000 mark and notched a record close on Thursday.

Brent crude futures jumped 3% on Thursday and are up more than 5.5% on the week on concerns that prolonged conflict in the Middle East is disrupting shipping and risks bringing the U.S. and Iran into a direct confrontation. “Netanyahu’s outright dismissal of a potential cease fire plus a US drone strike on a high ranking Kataib Hezbollah official in Baghdad have added to those risks,” said National Australia Bank’s head of commodity strategy, Robert Rennie. A commander from Kataib Hezbollah, an Iran-backed armed group was killed in a U.S. strike on Wednesday, the U.S. military said. Israel’s Prime Minister Benjamin Netanyahu said terms proposed by Hamas for a ceasefire were “delusional”, and vowed to fight on.

In bond markets this week, U.S. yields have risen in the wake of a strong jobs report and a chorus of central bank comments pointing to reticence on rate cuts.

Two-year yields are up about eight basis points (bps) this week to 4.45%. Ten-year yields seem to have settled above 4% and were steady at 4.14% on Friday, up 11 bps this week.

Fed funds futures imply less than a 20% chance of a rate cut in March and bets on the timing of the Federal Reserve’s first cut are now slowly drifting towards June from May.

Later on Friday, revisions to U.S. inflation will be closely watched in case of shifts in either direction.

Currency markets have followed the bond market’s lead with higher yields a support for the U.S. dollar. The dollar index is set to log a sixth week without loss in a row.

The euro was steady at $1.0777. The yen, down about 0.6% on the week, has been an underperformer after markets latched on to comments from Bank of Japan (BOJ) Deputy Governor Shinichi Uchida saying rapid rate hikes were unlikely.

“The policy implications of the speech are dovish and further confirm the structural dovish and massive accommodation bias for the BOJ,” said Brent Donnelly,

“They are simply in no hurry.”

The Nikkei, which tends to move in the opposite direction to the yen, broke above the 37,000 level for the first time since 1990, with SoftBank shares up 10% following a near 50% surge in shares of its majority-owned chip technology firm Arm.

Two-year swap rates in New Zealand and the kiwi dollar ticked higher after ANZ Bank surprised with a forecast for rate hikes in February and April following a run of hotter-than-expected economic indicators.

Bitcoin is set for its best week in two months, up 6.6% to $45,367.

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