Asian shares slip as oil falls on OPEC+ supply increase

SYDNEY: Asian share markets eased on Monday as investors turned cautious ahead of technology earnings, while oil prices fell after OPEC+ agreed to raise output targets and shipping continued through the Strait of Hormuz.

Brent crude slipped 0.5% to $71.79 a barrel, near four-month lows, while US crude fell 0.3% to $68.47.

OPEC+ agreed to increase output targets by another 188,000 barrels per day from August, following similar increases for June and July.

There were no new developments in US-Iran peace talks, but 160 ships were reported to have passed through the Strait of Hormuz from Monday to Saturday last week.

Lower energy prices, together with softer US payrolls data, reduced market expectations of an imminent Federal Reserve rate hike.

Futures now imply a 78% chance that the Fed will keep rates unchanged at its July 29 meeting.

Minutes of the Fed’s last meeting are due on Wednesday and are expected to provide more detail on the hawkish shift by some board members before the recent fall in oil prices.

Asian equities were mostly lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.2%, while Chinese blue chips were little changed.

Japan’s Nikkei fell 1.4%, and South Korea’s KOSPI dropped 1.2% after strong gains earlier in the year.

South Korea’s market is still up 90% so far this year, supported by artificial intelligence demand and tight chip supplies.

Samsung Electronics is due to report results on Tuesday, with analysts expecting an 18-fold increase in profits.

The world’s largest memory chipmaker by sales is expected to report operating profit of 86 trillion won, or $56.35 billion, for the April-June quarter, according to an LSEG SmartEstimate.

The upcoming earnings season is expected to test investor confidence in artificial intelligence-linked companies after semiconductor stocks and other AI-related shares drove recent market gains.

In the United States, Delta Air Lines and PepsiCo will be among the early companies reporting this week.

US futures were firmer, with S&P 500 futures up 0.2% and Nasdaq futures rising 0.7%, after the Nasdaq gained 2.1% last week.

In Europe, EUROSTOXX 50 futures fell 0.2%, while DAX futures and FTSE futures were flat.

Investors are also awaiting the US ISM Services survey later on Monday. Forecasts point to a slight decline to 54.0 in June, still indicating expansion.

Several central bankers are also scheduled to speak at a European Central Bank conference, including Fed Board Governor Christopher Waller. ECB President Christine Lagarde is due to speak in Paris.

New York Fed Governor John Williams is scheduled to speak on Thursday, ahead of next week’s testimony by Fed Chair Kevin Warsh before the House Financial Services Committee.

New Zealand’s central bank will meet on Wednesday. Markets expect it to raise its 2.25% cash rate by 25 basis points, which would be the first increase since mid-2023.

However, the fall in oil prices has raised the possibility that policymakers may keep rates unchanged.

In currency markets, the dollar index steadied at 100.880 after weakening following the June payrolls report.

The euro was flat at $1.1434, slightly above its recent 13-month low of $1.1325.

The dollar rose 0.2% to 161.79 yen, close to the 40-year peak of 162.84, keeping traders alert to possible Japanese intervention.

Gold was slightly lower at $4,166 an ounce after rising 2% last week.

US President Donald Trump is scheduled to attend a NATO meeting in Turkey this week and is expected to meet Ukrainian President Volodymyr Zelenskiy as part of efforts to push for an end to the war in Ukraine.