HK, regional markets up as action looms on inflation

Asian stocks climbed higher on Friday as global policymakers intensified their efforts to curb inflation. The dollar remained steady amid investors' uncertainty. In Hong Kong, the Hang Seng Index opened 119 points, or 0.5 percent, higher at 24,723. Meanwhile, the China Enterprises Index and tech index both gained 27 points, or 0.3 percent, and 17 points, or 0.41 percent, respectively.

Up north, the Shanghai Composite Index added 16 points, or 0.42 percent, to 3,891, while the Shenzhen Component Index surged 154 points, or 1.15 percent, to 13,563. The ChiNext Index also increased by 53 points, or 1.61 percent, to 3,351. Rising Middle Eastern oil prices, hovering above US$100 per barrel, contributed to the market's optimism.

Traders also eyed Wall Street's overnight rally, which boosted beaten-down tech stocks. Bond prices stabilized after a severe sell-off this week, with the 10-year US Treasury inching closer to 5 percent, its highest level since 2007. MSCI's Asia-Pacific index (excluding Japan) moved up 0.55 percent. Tokyo's Nikkei opened 545 points, or 0.85 percent, higher before receding slightly.

Seoul's Kospi gained 170 points, or 2.54 percent, before dropping later in the day. The Bank of England hinted at potential rate hikes if the Middle East conflict persists, while the Federal Reserve had already increased rates for the first time in three years. The European Central Bank had also signaled a need for further tightening by raising interest rates.

If yields climb again, market volatility could resurface, cautioned Chris Weston, head of research at Pepperstone. For now, however, the buying trend appears to be regaining traction, with the post-Fed risk-off sentiment losing its momentum. The yen weakened to 156.23 per US dollar as traders anticipated the Bank of Japan's policy decision later in the day.

The Bank of Japan was expected to raise interest rates to a 31-year high and commit to further measures to counter inflation risks. The key consideration for markets would be the manner of Bank of Japan's rate hike and Governor Kazuo Ueda's communication regarding future policy directions, said Michael Wan, currency strategist at MUFG.