Japan stocks led gains in Asia on Friday to notch their best week in four years, after Wall Street rallied overnight as fresh economic data eased recessionary fears.

The Nikkei 225 jumped 3.64% to cross 38,000 for the first time since Aug. 1. On a weekly basis, the index was up 8.67%, its highest gain since April 2020, according to FactSet data. Japan’s broader Topix, gained 2.99% to close at 2,678.6, also clocking its best week since 2020 — up 7.86%.

Lifting sentiment, U.S. retail sales increased 1% in July, far surpassing Dow Jones estimate of a 0.3% uptick. Weekly jobless claims also fell for the week.

“Today’s solid retail sales and claims data is a reminder that the sky is not falling on the U.S. economy,” Wolfe Research chief economist Stephanie Roth wrote on Thursday. “Yes, economic momentum has cooled, but we don’t appear to be headed for recession imminently.”

In Asia, Singapore’s non-oil domestic exports in July grew 15.7% year on year, having declined 8.8% in June and massively beating Reuters poll expectations of a 1.2% growth.

Total trade grew by 13.7% in July 2024, building on the 1.2% increase in June, as both exports and imports increased.

South Korea’s Kospi returned from a public holiday to trade 1.99% higher, ending at 2,697.23, while the small-cap Kosdaq climbed 1.22% to finish at 786.33.

Australia’s S&P/ASX 200 rose 1.34%, closing at 7,971.1. On Friday, Reserve Bank of Australia governor Michelle Bullock said while markets had brought forward their expectations of a rate cut following inflation outcomes in the U.S. and Australia, it was still “premature” to think about rate cuts.

She pointed out that inflation is still “too high” and is not expected to be back in the top of the RBA’s target band of 2% to 3% until the end of next year.

“Circumstances may change, of course, and the outlook is uncertain. But based on what the Board knows at present, it does not expect that it will be in a position to cut rates in the near term.”

Hong Kong’s Hang Seng index was up 1.81% as of its final hour of trade, while mainland China’s CSI 300 rose 0.11% to close at 3,345.63, extending gains to a second straight day after hitting a six-month low.

Taiwan and Hong Kong’s second-quarter GDP data will be out after market hours.

Overnight in the U.S., the Dow Jones Industrial Average jumped 1.39%, and the S&P 500 closed up 1.61% for its sixth straight gain. The tech heavy Nasdaq Composite jumped 2.34%.

—CNBC’s Brian Evans and Pia Singh contributed to this report.