Asian shares wobble as oil rises on renewed Gulf hostilities

Asian shares were mixed on Thursday as oil prices rose after renewed hostilities in the Gulf, reviving inflation concerns and putting pressure on global bond markets.

Oil prices advanced for a third consecutive session after the United States military completed another round of strikes against Iran. President Donald Trump said on Wednesday that the interim agreement with Iran to end the war was “over”, though he later said he did not expect a full-fledged war to resume.

Brent crude futures rose 1% to $78.85 a barrel and were up 9% for the week, briefly crossing $80 a barrel for the first time since June 22.

The rise in oil prices weighed on bonds and increased expectations that the Federal Reserve may have to raise interest rates this year to contain inflation. Fed funds futures now imply 38 basis points of policy tightening this year.

MSCI’s broadest index of Asia-Pacific shares outside Japan reversed earlier gains and was last down 0.5% as the rally in chipmakers lost momentum.

Japan’s Nikkei rose 1.3%, ending a three-day losing streak. South Korea’s KOSPI climbed as much as 4% before turning 1% lower as gains in Samsung and SK Hynix faded.

Wall Street futures were about 0.2% higher, while European stock futures rose 1%.

United States stocks closed mostly lower on Wednesday, with the Dow falling about 1% and the S&P 500 losing more than 0.25%. The Nasdaq gained 0.2%, supported by a 3.6% rise in Nvidia after media reports said China plans to allow top artificial intelligence firms to buy a limited number of the company’s H200 chips.

Minutes from the Federal Reserve’s latest meeting showed concern among policymakers over rising inflation. A few officials said there was already a case for raising borrowing costs, though they ultimately agreed to keep rates unchanged.

Bond selling deepened in Asia. The yield on 10-year Japanese government bonds rose to 2.9%, the highest since 1996, while Australia’s 10-year government bond yield reached a one-month high of 4.933%. The benchmark 10-year United States Treasury yield rose 1 basis point to 4.5772% after gaining 4 basis points overnight.

In currency markets, the dollar slipped 0.1% to 162.41 yen, staying close to a 40-year peak of 162.84. The euro rose 0.1% to $1.1426, while sterling held at $1.3396, just below a three-week high of $1.341.

Gold fell 0.2% to $4,067 an ounce.