Oil Rises, Asia Stocks Fall on Middle East Tension: Markets Wrap

(Bloomberg) — Oil and haven assets advanced after Iran fired a barrage of missiles at Israel, with the flight to safety sending stocks in Asia lower.

Crude oil rose in Asian trading after gaining more than 2% on Tuesday. Equities in Japan, Australia and South Korea declined following Tehran’s sharp but brief strike in reprisal for Israel’s attacks on Lebanon in recent days. The Israel Defense Forces said many of the missiles had been intercepted as Prime Minister Benjamin Netanyahu vowed to retaliate.

Chinese shares listed in Hong Kong rose on Wednesday, extending a stimulus-induced rally as traders returned from a public holiday. Wall Street’s fear gauge — the VIX — spiked higher on Tuesday, touching a key level that usually indicates more market swings are in store. Australian and New Zealand government bonds rose, along with Asian defense and energy shares. 

“The market is on alert for headlines from the Israel-Iran conflict,” said Chris Weston, head of research at Pepperstone Group. “There are clearly enough reasons to hold back on taking risk.”

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Markets in mainland China remain shut for Golden Week. Taiwanese stock market is also closed as Super Typhoon Krathon approaches the island.

The Middle East conflict eclipsed signals from US economic data on Tuesday. The US ISM price index fell by the most since May 2023, while US job openings rose in August to a three-month high, at odds with other readouts indicating slowing demand for workers. Treasury yields were steady after dropping on Tuesday, with the 10-year hovering around 3.73%. 

Investors will also get a chance to hear from vice presidential nominees JD Vance and Tim Walz in their sole debate of this election season in the US. 

Nike Inc.’s Hong Kong-listed suppliers may fall after the sportswear giant’s quarterly revenue missed estimates. Samsung Electronics Co. shares slipped after Bloomberg reported the company is laying off workers as part of a plan to reduce global headcount by thousands of jobs.

Elsewhere, South Korea’s inflation slowed more than expected, supporting the case for a pivot to monetary easing by the central bank when it sets policy next week. Meanwhile, euro-area inflation slowed below the European Central Bank’s 2% target for the first time since 2021, prompting money markets to add to bets on another quarter-point decrease by the ECB this month. 

Key events this week: 

• S&P Global Manufacturing PMI on Wednesday
• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 10:35 a.m. Tokyo time
• Japan’s Topix fell 0.9%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 2.5%
• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1072
• The Japanese yen fell 0.2% to 143.83 per dollar
• The offshore yuan rose 0.2% to 7.0184 per dollar

Cryptocurrencies

• Bitcoin rose 1% to $61,376.49
• Ether rose 0.9% to $2,473.28

Bonds

• The yield on 10-year Treasuries was little changed at 3.74%
• Japan’s 10-year yield declined two basis points to 0.830%
• Australia’s 10-year yield declined five basis points to 3.96%

Commodities

• West Texas Intermediate crude rose 1.7% to $71 a barrel
• Spot gold fell 0.1% to $2,659.43 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck.

©2024 Bloomberg L.P.