Asian stocks track Wall Street rally as oil prices drop
TLE Desk: Asian stocks rose on Friday, tracking a rally on Wall Street as falling oil prices eased inflation concerns, while investors awaited a Bank of Japan interest rate decision later in the day.
Markets were supported by the decline in crude prices after Saudi Arabia said it was moving to restore within days around half of the oil shipments disrupted by the closure of its East-West pipeline to the Red Sea.
Oil prices had surged by about a fifth in September amid disruptions to global supplies, but crude has since fallen around 5 per cent from recent highs. West Texas Intermediate dropped below $100 a barrel for the first time since Friday before edging higher.
The rise in oil prices had been a major driver of inflation since the United States and Israel began their war on Iran at the end of February. The latest decline in crude prices provided some relief to equity markets.
Shares advanced in Seoul, Tokyo, Hong Kong, Shanghai, Sydney and Taipei, while Singapore, Wellington and Manila recorded modest losses.
Investors were also reassured by the Federal Reserve’s decision to raise borrowing costs this week, which was seen as addressing concerns over the risk that persistent inflation could weigh on the US economy.
The moves in oil prices and the Fed’s action also helped keep the yield on the benchmark 10-year US Treasury bond below 5 per cent, easing pressure on global borrowing costs.
The yen weakened against the dollar ahead of the Bank of Japan’s decision, with markets widely expecting a 25-basis-point increase in interest rates.
Analysts said the rate decision itself could have a limited impact on the yen because the expected move was already reflected in market prices. Attention is instead expected to focus on Governor Kazuo Ueda’s comments and signals about the pace of further monetary tightening.
At around 0200 GMT, Tokyo’s Nikkei 225 was up 0.7 per cent at 64,554.64, while Hong Kong’s Hang Seng Index gained 0.9 per cent to 24,834.41. Shanghai’s Composite Index rose 0.8 per cent to 3,907.64.
West Texas Intermediate crude was down 0.7 per cent at $101.23 a barrel, while Brent crude fell 0.8 per cent to $104.03.
On Wall Street, the Dow Jones Industrial Average closed 0.6 per cent higher at 51,778.04, while London’s FTSE 100 ended 1.2 per cent higher at 10,816.14.
