The Albany Gazette - Most Asian stocks track Wall St rally, yen drops after BoJ rate hike

The Federal Reserve's lift in borrowing costs this week provided some relief to traders concerned that policymakers were not moving quick enough to address a spike in inflation that could deal a blow to the world's top economy.

That has been helped by news that Saudi Arabia was moving to restore within days about half of crude shipments disrupted by the stoppage of its East-West pipeline to the Red Sea.

The conduit, even more important since the effective closure of the Strait of Hormuz by Iran, was shut last week after being targeted by Yemen's Iran-backed Houthis.

Crude prices, which had soared around a fifth in September, have fallen around five percent from recent highs, with West Texas Intermediate dipping below $100 for the first time since last Friday. WTI was down more than one percent Friday and Brent lost two percent.

The surge in oil this month has been among the main catalysts for rising inflation since the United States and Israel began their war on Iran at the end of February.

And the latest fall-off provided some much-needed support to stocks.

Seoul, Tokyo, Hong Kong, Shanghai, Taipei, Mumbai and Bangkok all advanced, although there were losses in Singapore, Wellington, Jakarta and Manila. Sydney was barely moved.

London, Paris and Frankfurt dipped.

The latest moves in oil and the Fed's action reassured investors and kept the 10-year US Treasury bond yield -- a key indicator of borrowing costs throughout the world's biggest economy -- back below five percent.

Japan's Nikkei was also helped by a drop in the yen against the dollar that came in the wake of the BoJ's well-telegraphed decision to lift rates to their highest level since 1995.

Pressure has increased on officials to further tighten monetary policy as a spike in oil prices caused by the Middle East crisis -- which shows little sign of ending anytime soon -- is expected to keep putting a floor under inflation.

"Given that underlying CPI inflation has been approaching two percent and financial conditions have been accommodative, the bank will continue to raise the policy interest rate," the BoJ said on its website.

But the yen slipped to more than 157 to the greenback, compared with around 156 earlier.

Stephen Innes at Quintex Intel suggested traders were jolted by the fact that the hike was not unanimous, passing by a 7-2 majority.

"For a market looking for evidence that the BoJ could shorten the distance between hikes, those dissents mattered," he wrote.

"Traders were looking for signs that the Bank could move faster from here, yet two members were already arguing that even today’s move had come too soon."

Focus will now turn to Governor Kazuo Ueda's news conference due later in the day.

"Attention should fall on the forward swaps curve and the Bank's guidance around the pace and urgency of further tightening," wrote Chris Weston at Pepperstone.

"The market will be looking for confirmation that further normalisation remains firmly on the table, while assessing whether the Bank sees any urgency to move again."

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: UP 1.4 percent at 65,018.95 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 24,809.91

Shanghai - Composite: UP 0.9 percent at 3,911.87 (close)

London - FTSE 100: DOWN 0.2 percent at 10,795.86

Dollar/yen: UP at 156.98 yen from 155.96 yen on Thursday

Euro/dollar: UP at $1.1482 from $1.1480

Pound/dollar: UP at $1.3371 from $1.3358

Euro/pound: DOWN at 85.88 pence from 85.94 pence

West Texas Intermediate: DOWN 1.7 percent at $100.22 per barrel

Brent North Sea Crude: DOWN 2.0 percent at $102.70 per barrel

New York - Dow: UP 0.6 percent at 51,778.04 (close)

(W.Williams--TAG)