Hong Kong shares hit a three-year high Friday, leading gains in the region as investors weighed inflation data from Japan against tariff threats from U.S. President Donald Trump.

Hong Kong's Hang Seng Index rose 3.76% to its highest level since February 2022, according to data from LSEG. The Hang Seng Tech index added 6.15%. Shares of Hong Kong listed Alibaba rose 14.7% following a significant profit increase for the company in the December quarter, driven by growth in its Cloud Intelligence division and e-commerce sector. Mainland China's CSI 300 rose 1.26% to close at 3,978.44.

Japan's Nikkei 225 added 0.26% to close at 38,776.94 while the Topix traded flat to close at 2,736.53. Japan's inflation rate in January climbed to 4%, hitting its highest level since January 2023. Core inflation — which excludes prices of fresh food — rose to 3.2%, beating Reuters' expectations of 3.1%.

South Korea's Kospi ended flat at 2,654.58 while the small-cap Kosdaq added 0.83 to close at 774.65.

Australia's S&P/ASX 200 slipped 0.32% to close the trading day at 8,296.2.
Investors will continue keeping an eye on the Japanese yen, which strengthened to a more than two-month high of 150.52 per U.S. dollar on Thursday amid bets of more rate hikes by the Bank of Japan this year. The currency is currently trading at 150.22 against the greenback.

Overnight in the U.S., the three major averages closed lower after the S&P 500 hit record highs for two consecutive days. Investors sold off shares of some popular companies following a weak forecast from retail giant Walmart, which raised concerns about the economic outlook.

The Dow Jones Industrial Average lost 450.94 points, or 1.01%, to end at 44,176.65. The S&P 500 shed 0.43% and closed at 6,117.52, and the Nasdaq Composite dipped 0.47% and closed at 19,962.36

Source: CNBC