HONG KONG — Equity markets across Asia retreated on Friday, mirroring declines on Wall Street, while oil prices climbed to multi-month highs as geopolitical risks in the Middle East intensified.
Brent crude, the global benchmark, rose 0.9% to $108.59 a barrel, marking its strongest level since May. In contrast, the price hovered around $72 per barrel in late February prior to the outbreak of war. Benchmark U.S. crude also gained, climbing 0.7% to $103.22 per barrel.
Strategists at ING highlighted the vulnerability of global energy supplies, noting that oil transit through the Strait of Hormuz remains “well below pre-war levels.” In a Friday commentary, commodities analysts Warren Patterson and Ewa Manthey described the situation as increasingly fragile.
Japanese markets led the regional decline, with the Nikkei 225 dropping 2.8% to close at 63,442.30. SoftBank Group, known for its investment in OpenAI, saw its shares fall 4.1%. South Korea’s Kospi index lost 2.3%, settling at 6,872.39, weighed down by declines in Samsung Electronics, which fell 3.9%, and memory chipmaker SK Hynix, which dropped 3.6%.
In China, the Shanghai Composite index dipped 1.8% to 3,862.73. However, the trading debut of AI chipmaker Enflame provided a bright spot, with its shares surging approximately 180%.
Other regional indices also posted losses. Hong Kong’s Hang Seng fell 0.8% to 24,753.54, Australia’s S&P/ASX 200 declined 1.2% to 8,712.20, Taiwan’s Taiex lost 1.7%, and India’s Sensex dipped 1%.
The sell-off in equities followed a fourth consecutive day of losses on Wall Street, where the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all retreated by roughly 0.6% to 0.7% on Thursday.
Investors are now turning their attention to the U.S. Consumer Price Index data for August, scheduled for release Friday ahead of the Federal Reserve’s meeting next week. This follows Thursday’s Producer Price Index report, which showed August inflation rising 5.4% year-on-year, an acceleration from July’s 4.8% increase.
Volatile bond markets reflected these inflationary pressures, with U.S. Treasury yields remaining elevated due to higher energy costs and growing government debt. The yield on the 10-year Treasury note rose to 4.96% early Friday, up from 4.83% on Wednesday.
In currency markets, the U.S. dollar weakened slightly against the Japanese yen, trading at 154.35 compared to 154.42 yen. The euro also dipped, trading at $1.1605, down from $1.1612.
Is the Strait of Hormuz really that vulnerable? The ING analysts seem alarmist here.
Enflame jumping 180% is wild. China is really pushing hard on domestic AI chip independence.
SoftBank down 4.1% again? Seems like OpenAI hype isn’t enough to offset geopolitical fears.
Oil above $108 is painful. How long can consumers bear these energy costs before demand collapses?