A look at the day ahead in European and global markets from

Ankur Banerjee

Japanese markets got a shot in the arm after the government

indicated it wants the country's state pension funds to increase

investments in domestic assets, an eagerly awaited move to spur

repatriation that had been mooted for years.

Finance Minister Satsuki Katayama said Japan wanted to encourage

pension funds, including the giant Government Pension Investment

Fund, to make "substantially greater" investments in domestic

financial assets.

GPIF, which is one of the world's largest pension funds, held

293.4 trillion yen ($1.81 trillion) in assets at the end of

December. Its movements are closely watched by financial

markets, as any change in strategy is often mirrored by other

funds.

Concerns had been brewing over the Takaichi administration's

expansionary fiscal policy, and the risk of political

interference in monetary policy sparked a selloff in Japanese

government bonds (JGBs), pushing yields to multi-decade highs

earlier this week.

But the latest broadside lifted the yen, eased yield pressure

and kept the momentum going for the Nikkei. The yen

has been stuck near 40-year lows but firmed more than

0.5% to 161.45 per U.S. dollar after Katayama's comments.

Meanwhile, the AI theme is well and truly back ahead of the

high-profile U.S. market debut for chip bellwether and AI poster

child SK Hynix later in the day as the South Korean

firm raised $26.5 billion in its offering.

Chip stocks have lost some momentum in recent weeks after a

stellar run, as investors fret about AI spending, sky-high

valuations and the pace of profit growth.

But for now, investors are keen to see how the debut rerates SK

Hynix versus its U.S. rival Micron, with the demand from

retail investors also likely to be in focus.

Micron trades at a 12-month forward price-to-earnings ratio

of 6.66 times versus SK Hynix's 5.5 times.

Key developments that could influence markets on Friday:

Economic events: June inflation data for Germany and France