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BANGKOK (AP) — Asian shares fell on Thursday following a significant decline in U.S. stocks, driven by surging oil prices that exceeded $110 a barrel.
The decline in U.S. stocks occurred amid concerns that inflation could worsen, exacerbated by geopolitical tensions in the Middle East, which have also diminished prospects for lower interest rates from the Federal Reserve.
Impact of Rising Oil Prices
Oil prices have surged due to disruptions in the Persian Gulf's energy sector, with Brent crude trading at $111.51 a barrel, marking a 3.9% increase from the previous day. U.S. benchmark crude oil rose by 0.5% to $95.97 per barrel, while the Henry Hub future contract for natural gas climbed by 4.6%.The Iranian government has threatened to target oil and gas infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates, further contributing to the volatility in oil prices.
Asian Markets Reaction
In Asian trading, Japan's Nikkei 225 index dropped 2.5% to 53,875.94 after the Bank of Japan decided to maintain its benchmark interest rate at 0.75%, citing the ongoing conflict in the Middle East as a contributing factor.The Kospi in South Korea fell by 1.3% to 5,845.62, while Hong Kong's Hang Seng index decreased by 0.2% to 25,725.77. The Shanghai Composite index lost 0.9%, settling at 4,027.73. Australia's S&P/ASX 200 also experienced losses, and Taiwan's Taiex fell by 1.2%.
U.S. Stock Market Performance
On Wednesday, the S&P 500 fell 1.4% to 6,624.70, marking a reversal for the week. The Dow Jones Industrial Average decreased by 1.6% to 46,225.15, while the Nasdaq composite dropped 1.5% to 22,152.42. This downturn was influenced by the Federal Reserve's decision to maintain interest rates instead of resuming cuts.Federal Reserve Chair Jerome Powell expressed uncertainty regarding the trajectory of oil prices and the impact of tariffs imposed by President Donald Trump.
Inflation Concerns
A report released on Wednesday indicated that inflation pressures were already mounting prior to the onset of the war, with U.S. wholesale inflation unexpectedly accelerating to 3.4% last month.The combination of rising oil prices, increasing U.S. Treasury yields, and a stronger dollar is contributing to significant challenges for Asian markets and currencies.
