Asian shares slipped on Wednesday despite another record-setting session on Wall Street, while oil prices climbed as investors weighed escalating tensions between Saudi Arabia and Yemen’s Iran-backed Houthis against rising Middle East supply.
MSCI’s broadest index of Asia-Pacific shares excluding Japan fell 0.3%, although it remained up 1.5% so far this month.
Japan’s Nikkei declined 0.86% while Hong Kong’s Hang Seng Index fell 0.63% in early trading. Australian shares were little changed while mainland China’s financial markets remained closed for a holiday.
Oil prices rose amid concerns that a storm heading towards the Gulf of Mexico could disrupt supplies from North American production areas, alongside attacks by the Houthis on Saudi Arabia.
US crude rose 1.05% to US$90.38 a barrel while Brent crude gained 1.06% to US$101.65.
However, increased crude shipments from the Middle East provided some offset to supply concerns. Vitol chief executive Russell Hardy said around 12 million barrels per day of crude and two million barrels per day of refined products had left the region by tanker over the past seven to 10 days.
The weaker Asian session followed gains on Wall Street, where the S&P 500 rose about 0.6% to another record on Tuesday. The Nasdaq gained 0.45% to an all-time high while the Dow Jones Industrial Average rose 0.5%.
Improved sentiment in US equities came after global bond yields stabilised, with French government bonds recovering after far-right presidential candidate Marine Le Pen pledged spending cuts and a reduction in France’s budget deficit.
Ten-year French yields fell more than 11 basis points while the spread between French government bonds and German Bunds narrowed to 132 basis points from almost 160 basis points last week.
“The magnitude of the move is striking given the 2027 election remains several months away and France’s deteriorating fiscal dynamics are hardly new,” said Laura Cooper, Nuveen’s head of macro credit and global investment strategist.
“What has changed is sharply higher yields, leaving investors less willing to look through those vulnerabilities.”
The euro recovered slightly to stabilise above US$1.1250 as European bond markets showed signs of calming.
The dollar index rose 0.03% to 101.94 after falling 0.27% in the previous session. The yen weakened 0.19% to 158.43 per US dollar while sterling slipped 0.08% to US$1.3262.
US Treasury yields remained a focus, with the 10-year yield rising back to 5.3% in Asian trading. Longer-term yields edged higher ahead of a 10-year Treasury auction later Wednesday and a 30-year auction on Thursday.
Investors are also awaiting minutes from the Federal Reserve’s Sept 15-16 policy meeting for clues on the central bank’s rate outlook. Market expectations for a rate increase this month have fallen to 19% from about 50% a week earlier.
Spot gold rose to US$4,165.53 an ounce.
Reuters
