Global Markets Experience Mixed Results Amid Rising Tensions
Asian markets displayed a mixed performance on Friday, reacting to the escalating tensions in the Middle East that led to a decline in Wall Street shares and a surge in crude oil prices. Japan’s Nikkei 225 index edged up 0.3% to 38,668.36, while Australia’s S&P/ASX 200 slipped 0.7% to 8,145.70. South Korea’s Kospi added 0.6% to 2,577.51, and Hong Kong’s Hang Seng jumped 1.6% to 22,473.56. Trading was halted in Shanghai.
In the currency market, the US dollar dipped to 146.52 Japanese yen from 146.83 yen, while the euro remained steady at $1.1034. Investors are eagerly awaiting a policy speech from Japan’s new Prime Minister, Shigeru Ishiba, which may provide insight into the government’s stance on interest rates and spending.
The Bank of Japan has been gradually increasing its benchmark rate from near zero, currently standing at around 0.25%. Although expectations of rising rates initially boosted the yen, officials have since signaled that they do not favor further rate hikes at this time, causing the yen to fall against the dollar.
A weaker yen could benefit Japan’s export giants, such as Nintendo and Toyota, by increasing the value of their overseas earnings. However, it also raises the cost of importing essential commodities like oil, driving prices higher and affecting household spending.
On Wall Street, stocks plummeted on Wednesday as oil prices continued to rise amidst concerns over Israel’s response to Iran’s missile attack. The S&P 500 fell 0.2% to 5,699.94, while the Dow Jones Industrial Average dropped 0.4% to 42,011.59. The Nasdaq composite edged down less than 0.1% to 17,918.48.
Benchmark US crude oil added 5 cents to $73.76 a barrel, while Brent crude, the international standard, gained 8 cents to $77.70 a barrel. Brent crude surged 5% on Thursday, putting it on track for its largest weekly percentage gain in nearly two years.
The increase in oil prices was triggered by President Joe Biden’s suggestion that the US and Israeli officials were discussing a potential strike against Iranian oil facilities. However, Biden also stated that he does not expect Israel to retaliate immediately against Iran.
A report on Thursday showed that growth in US services businesses accelerated to its strongest pace since February 2023, while a separate report indicated that layoffs across the US remain relatively low. Despite these positive signs, the dominant concern on Wall Street remains whether the job market will continue to hold up after the Federal Reserve maintained interest rates at a two-decade high to combat high inflation.
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