New Delhi: Asian markets declined on Thursday as oil prices surged to four-year highs amid concerns that the U.S. could launch further strikes against Iran. Positive earnings from major technology firms offered only limited support to investor sentiment ahead of results from Apple.
European markets are expected to open lower, with regional stock futures down 0.8%. Investors are cautious as the European Central Bank and Bank of England may signal tighter monetary policy, even after the Federal Reserve kept interest rates unchanged. Notably, three Fed board members voted to remove the central bank’s easing bias, marking its most divided decision since 1992.
Outgoing Fed Chair Jerome Powell said he would remain as a governor to safeguard institutional independence, while Kevin Warsh—nominated by President Donald Trump—moves toward confirmation as his successor.
Oil prices drove much of the market anxiety, with Brent crude jumping more than 6% to a four-year high of $125 per barrel following reports of potential U.S. military action against Iran.
As a result, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1%, though it remains on track for a strong 15% monthly gain. Japan’s Nikkei 225 fell 1.4% on the day but is still up 16% for April.
South Korea’s market briefly hit a record high before slipping 0.8%, while China’s blue-chip stocks were largely unchanged and Hong Kong’s Hang Seng Index declined 1.2%.
“The future path of the Iran conflict is still extremely uncertain … All outcomes are still on the table: escalation, impasse and peace, with starkly different implications,” said Luke Yeaman, chief economist at the Commonwealth Bank of Australia.
“Central banks are waiting to see which outcome prevails before taking decisive steps in any direction. Much like ships transiting the Strait of Hormuz, they’re steering through a minefield, with danger lurking at every turn.”
In Asia, Wall Street futures reversed earlier tech-driven gains. Nasdaq futures were last down 0.3%.
Strong earnings from Alphabet Inc. pushed its shares up 7% in extended trading, while Microsoft and Amazon also reported solid results, boosting expectations for Apple’s performance later on Thursday.
However, Meta Platforms disappointed investors after raising its annual capital expenditure forecast to fund further investments in artificial intelligence infrastructure, sending its shares down 7%.
Battered Bonds
Global bonds came under pressure on Thursday as a surge in oil prices and a more hawkish stance from the Federal Reserve triggered a selloff in Treasuries. Investors quickly scaled back expectations of interest rate cuts this year, with markets now even pricing in a possible rate hike by next spring.
Benchmark U.S. Treasury yields climbed 1 basis point to 4.4298%, having jumped 6 bps overnight to 4.434%, the highest since late March.
Yields also climbed globally. Japan’s 10-year government bond yield rose 4 bps to 2.5%, its highest level since 1997, while Australia’s 10-year yield jumped 6 bps to 5.066%, mirroring the broader selloff in fixed-income markets.
The U.S. dollar strengthened alongside rising yields, reaching a two-week high. It edged up 0.1% to around 160.50 yen after jumping 0.4% overnight to 160.48 yen, moving closer to levels that have previously prompted intervention by Japan.
The Japanese yen has weakened more than 2% since the escalation of tensions involving Iran in late February, as investors increasingly bet that neither policy tightening nor currency intervention will be sufficient to support it.
(DD News)