Rising oil prices and geopolitical tensions are weighing on Asian stock markets
Quick Look
- Asian stock markets fell on rising oil prices and geopolitical tensions following Iran's attacks on ships and the US sinking of Iranian oil tankers.
- In Tokyo, the Nikkei index fell 0.8 percent, while statements from the Japanese central bank fueled expectations of rapid interest rate hikes.
AI-generated summary
Why It Matters
Asian stock markets were sensitive to rising oil prices amid geopolitical tensions in the Middle East after Iran attacked ships and the US sank Iranian oil tankers. In addition, statements from the Japanese central bank fueled expectations of rapid interest rate increases.
Rising oil prices and growing geopolitical tensions are unsettling investors in Asia. In Japan, the prospect of rapid interest rate increases is also weighing on the situation.
Tokyo Stock Exchange: Rising oil prices and concerns about an expansion of the Middle East conflict are weighing on the stock markets in Asia. Photo: dpa
Singapore/Tokyo/Hong Kong/Shanghai. Fears of an expansion of the Middle East conflict and an associated rise in oil prices weighed on Asian stock markets on Thursday.
In Tokyo, the Nikkei index, which includes 225 values, fell by 0.8 percent to 64,597 points.
The broader Topix was trading 0.3 percent lower at 4,033 points.
Investors in China also held back: the Shanghai stock exchange lost 0.1 percent to 3,946.28 positions.
The index of major companies in Shanghai and Shenzhen fell 0.2 percent to 4,564.87 points.
The restraint was triggered by geopolitical tensions after Iran attacked ten ships near the Strait of Hormuz and the US sank five Iranian oil tankers. In addition, statements from the Japanese central bank (BOJ) fueled expectations of rapid interest rate increases. “For the Japanese stock market as a whole, the rise in crude oil prices and interest rates are acting as a brake,” said Wataru Akiyama, strategist at Nomura Securities.
Nintendo was one of the losers in Tokyo with a loss of 5.8 percent. The cable manufacturers Fujikura and Furukawa Electric also fell significantly. On the other hand, banks and investment firms that benefit from higher interest rates, as well as the oil and coal sectors, were in demand.
In China, the withdrawal of the major Swiss bank UBS from part of its business caused a stir. The institute said it would close its fund sales unit in Shenzhen, which was founded in 2022, at the end of September because it could not hold its own in a highly competitive market.
Overall, investors were nervous about the upcoming US inflation data, which is likely to influence the US Federal Reserve's monetary policy course. “The bond market is under pressure as oil prices reignite inflation fears,” said Prashant Newnaha, strategist at TD Securities. Agricultural commodities would also break out and are likely to push consumer prices further higher in the coming months.
More: Japan's economy grows faster in the second quarter than initially estimated
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What to Watch
AI outlook — possibilities, not facts
The Japanese central bank will increase interest rates in the coming months.
Likely · Within months
Oil prices will continue to rise in the near term if geopolitical tensions continue.
Likely · Within weeks
Open Questions
- How long will geopolitical tensions in the Middle East last?
- Will the Japanese central bank actually raise interest rates quickly?
- How will US inflation data influence the Fed's monetary policy decisions?
