Stocks rise as oil dips, yen wobbles ahead of BOJ

Asian stocks climbed on Friday as investors grappled with policymakers' efforts to curb inflation, buoyed by a dip in oil prices ahead of an anticipated Bank of Japan rate hike. The Middle East war's uncertainty has kept oil prices above $100 per barrel, fueling inflation worries globally. Brent crude futures fell 1% to $103.77 a barrel, despite supply concerns from potential conflicts between Saudi Arabia and Yemen's Houthis.

Wall Street's overnight rally, driven by tech stocks, influenced traders. Bond prices steadied after another severe sell-off this week, with the 10-year US Treasury climbing to its highest since 2007 at 4.936%. MSCI's Asia-Pacific index outside Japan increased 0.55%, while Japan's Nikkei rose 0.9% and South Korea's KOSPI climbed 2%.

The Bank of England may need to raise rates if the Middle East war persists, and the Federal Reserve increased rates for the first time in three years, hinting at more hikes. The European Central Bank also signaled a need for further tightening by raising rates last week. Traders await the Bank of Japan's verdict, with the central bank expected to raise rates to a 31-year high and promise more action to combat inflation.

The yen weakened to 156.23 per US dollar as investors anticipated the BOJ's decision to hike rates and provide further stimulus. The yen has gained this month due to the prospect of faster BOJ rate hikes and repatriation signs from Japanese investors but has lost some gains this week as the US central bank adopted a hawkish stance.

A 25 basis point rate hike from the Fed was priced in, and it may not significantly bolster the yen. Governor Ueda will need to convince markets that the BOJ intends to hike rates more aggressively. The euro hovered around $1.148, poised for a 1% weekly decline, its steepest drop since June. Gold prices edged up 0.5% to $4,361 an ounce.