Asian shares mixed as Middle East tensions Impact Wall Street

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Asian stocks performed mixed on Friday as heightened tensions in the Middle East led to Wall Street falls and higher petroleum prices. Japan's Nikkei 225 increased by 0.3 per cent to 38,668.36, while Australia's S&P/ASX 200 decreased by 0.7 per cent to 8,145.70. South Korea's Kospi rose 0.6 per cent to 2,577.51, while Hong Kong's Hang Seng climbed 1.6 per cent to 22,473.56. Trading in Shanghai was halted, reported the Associated Press.

In currency markets, the US dollar fell to 146.52 Japanese yen from 146.83, while the euro held firm at USD 1.1034.

According to the report, Shigeru Ishiba, Japan's new Prime Minister who took office on Tuesday, was slated to deliver a policy statement on Friday that might explain his government's stance on interest rates and spending. The Bank of Japan has progressively increased its benchmark rate from near zero to roughly 0.25 per cent. However, after recent hints from officials against future rate hikes, the yen has depreciated versus the dollar during the last two days.

A weaker yen can help Japan's major exporters, including Nintendo and Toyota, by raising the value of their overseas earnings. However, it raises import costs for oil and other critical commodities, resulting in higher prices and tighter household budgets.

On Wall Street, stocks dipped on Wednesday as rising oil costs continued to dampen investor optimism. The S&P 500 was down 0.2 per cent to 5,699.94, the Dow Jones Industrial Average fell 0.4 per cent to 42,011.59, and the Nasdaq composite fell less than 0.1 per cent to 17,918.48.

US crude prices rose 5 cents to USD 73.76 per barrel, while Brent crude, the international benchmark, climbed 8 cents to USD 77.70 per barrel. Brent crude rose 5 per cent on Thursday and is on course for its biggest weekly percentage gain in nearly two years.

The surge in oil prices followed comments made by President Joe Biden on discussions between US and Israeli officials about a possible strike on Iranian oil facilities. Biden mentioned he does not expect immediate retaliation from Israel against Iran.

Iran is a major oil producer, and an escalation in the conflict might impede oil flows to China and have an impact on surrounding countries that rely on global crude supply. However, current indicators indicate that oil inventories remain robust.

A report in the United States stated that growth in the real estate, healthcare, and other service industries has risen to its highest level since February 2023. Meanwhile, another study showed that layoffs in the United States remained modest, with only a tiny uptick in unemployment benefit claims last week compared to historical figures.

Despite the current concerns about the Middle East, Wall Street remains focused on the resilience of the job market. The Federal Reserve has kept interest rates at a two-decade high in an effort to control inflation. Stocks are near record levels due to optimism about continued economic growth, especially after the Fed recently cut rates for the first time in over four years and indicated further cuts may be on the horizon.