Tokyo – Asian stock markets opened lower on Tuesday, with the Nikkei 225 dropping 1.6% to 68,098.54 as rising crude prices and inflation concerns weighed on investor sentiment. The broader regional picture showed mixed moves: Australia’s S&P/ASX 200 inched up 0.2% to 9,088.60, while South Korea’s Kospi fell 0.6% to 6,933.60 after an earlier surge. Hong Kong’s Hang Seng slipped 0.6% to 25,289.88 and the Shanghai Composite declined 0.5% to 3,963.53.
Oil price surge fuels market caution
U.S. benchmark crude rose 34 cents to $84.84 a barrel in Asian trading, and Brent crude climbed 21 cents to $91.08 a barrel. The price swing follows a volatile month in which Brent fluctuated between $72 and $102 as hopes rose and fell for a deal between the United States and Iran that would allow oil tankers to move freely through the Persian Gulf.
Higher oil prices have pushed Treasury yields higher, increasing pressure on the global economy. The yield on the 10‑year U.S. Treasury rose to 4.72% from 4.68% on Friday, a notable jump from the sub‑4% levels seen before the Iran conflict escalated. Elevated yields typically raise borrowing costs for businesses and consumers, adding to inflation concerns.
Strong earnings provide some balance
Analysts noted that robust earnings reports from Asian companies are helping to offset the negative impact of higher energy costs. Masashi Akutsu and Tetsuhiro Tokuyama of BofA Securities highlighted that artificial‑intelligence investment has broadened the beneficiary base, boosting demand across semiconductor equipment, power gear, machinery, electronic components and related materials. Recent quarterly earnings from Japanese firms were especially strong, mirroring a similar trend in the United States.
Both the Bank of Japan and the U.S. Federal Reserve are expected to consider raising interest rates in the coming months, a move that could further temper inflation but also slow economic growth.
U.S. market backdrop
On Wall Street, the S&P 500 fell 0.5% to 7,745.06, the Dow Jones Industrial Average dropped 272 points (0.5%) to 53,459.78, and the Nasdaq composite slipped 0.3% to 26,644.91. The declines came as oil prices accelerated, reinforcing the link between energy costs and equity performance.
Higher Treasury yields have already pushed the average long‑term U.S. mortgage rate near its highest level in a year, though recent data suggest July inflation was less severe than earlier summer estimates.
Currency movements
The U.S. dollar strengthened slightly against the Japanese yen, moving to 159.43 yen from 159.37 yen. The euro edged up to $1.1585 from $1.1581.
Overall, the combination of rising oil prices, inflation worries, and higher Treasury yields created a challenging environment for Asian equities, even as strong corporate earnings offered a countervailing force.
Original reporting: KTBS 3 (Shreveport) — read the source article.
