Asian stocks under pressure, oil near four-month low as volatility risks highlighted

TOKYO: Asian stocks were mixed on Wednesday while oil prices stayed near four-month lows, as investors weighed easing supply concerns in the Gulf against warnings of renewed volatility in equity markets.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.4% after moving between gains and losses.

South Korean shares rose 3.5%, recovering part of Tuesday’s 10% fall, which was their sharpest one-day drop since March.

Japan’s Nikkei fell 0.4%, while Taiwan stocks declined 1.9%.

Michael McCarthy, market analyst at Moomoo Securities Australia, said recent price moves pointed to market instability.

“Price action in markets over the last seven trading days has been alarming, not just when it falls, but also when it rises,” he said. “When markets move so rapidly, in either direction, it’s a sign of instability.”

Oil prices fell more than 1% on Wednesday, extending losses for the week and trading near four-month lows.

The decline came as more oil tankers stranded in the Gulf were expected to move out of the Strait of Hormuz.

However, investors remained cautious over the durability of the US-Iran accord. Washington and Tehran have given conflicting accounts of what was agreed under the peace deal, including on nuclear inspections and control of the Strait of Hormuz.

Yoshitaka Araya of Monex Securities said the gap between US and Iranian positions “could become a source of concern going forward.”

European futures were mostly lower. Euro Stoxx 50 futures and German DAX futures each fell 0.3%, while FTSE futures declined 0.67%.

US futures were little changed, with S&P 500 E-minis up 0.1%, Nasdaq 100 E-minis 0.2% higher and Dow E-minis flat.

The yield on benchmark US 10-year notes slipped 0.6 basis points to 4.487%.

Investors were also awaiting earnings from Micron Technology later on Wednesday, which could provide signals on demand in the memory and AI chip sector after this year’s rally.

In currency markets, the US dollar extended gains and touched a fresh 13-month high against a basket of major currencies.

The dollar index rose 0.07% to 101.46.

The yen remained under pressure at 161.53 against the dollar, keeping markets alert to the possibility of Japanese currency intervention.

A summary of opinions from the Bank of Japan’s latest meeting showed policymakers discussed rising inflation risks. Some members called for faster interest rate increases after the central bank raised rates to a 31-year high of 1.00%.

The euro weakened 0.15% to $1.1364, while sterling eased to $1.3192.

Spot gold fell 1.1% to $4,064.01 an ounce, touching an almost two-week low as expectations of higher rates reduced demand for non-yielding assets.

In cryptocurrencies, bitcoin rose 0.2% to $62,499.52, while ether slipped 0.2% to $1,658.09.