Asian shares fall, oil prices hold steady above USD 100 per barrel

BANGKOK: Asian shares skidded Thursday following a retreat on Wall Street as the price of crude oil again traded above USD 100 a barrel.

US futures were modestly higher.

The price of Brent crude jumped 3.4 per cent on Wednesday, surging above USD 100 a barrel for the first time since July. It fell back slightly early Thursday to about USD 101 a barrel.

The latest attacks between the US and Iran are stifling the flow of oil through the Strait of Hormuz, and US President Donald Trump said Wednesday that oil prices likely won't fall until after US midterm elections.

In Asian trading, Tokyo's Nikkei 225 lost 0.8 per cent to 64,597.46 and the Kospi in South Korea declined 0.9 per cent to 6,989.06.

Hong Kong's Hang Seng fell 1.4 per cent to 24,932.95, while the Shanghai Composite index gave up 0.3 per cent to 3,939.43.

In Australia, the S&P/ASX 200 slipped 1.5 per cent to 8,774.50.

Taiwan's Taiex fell 0.8 per cent.

On Wednesday, the S&P 500 index fell 0.5 per cent. The Dow Jones Industrial Average dropped 0.8 per cent, and the Nasdaq composite gave up 0.6 per cent. The indexes are all on track for a weekly loss.

Oil prices drove much of the action on Wall Street. The US destroyed five Iranian tankers on Tuesday in a series of attacks between the two nations. The conflict that began in February has essentially shut down traffic in the Strait of Hormuz, where a fifth of the world's oil supply passed before the war began.

Retailers were among the companies that pulled the market lower. Amazon fell 1.8 per cent, Starbucks lost 1.9 per cent and Home Depot dropped 1 per cent. Every sector within the benchmark S&P 500 declined except for energy, which rose as oil companies notched gains. Exxon Mobil rose 2.2 per cent and Chevron added 1.9 per cent.

The jump in oil prices over the course of the war has pushed prices for many goods higher. Gasoline prices in the US are up about 32 per cent from a year ago to USD 4.22 per gallon. Higher fuel costs cut into household budgets directly and also indirectly raise prices for goods because of higher shipping costs.

The price of diesel, which can have an outsized impact on consumers because it is used in shipping and production, hit an all-time high Friday and has continued to climb since. The average price for a gallon reached USD 5.94 overnight and is now 9 cents higher than it was Friday.

Inflation was already stubbornly high when the US started its war against Iran because of the US trade war with much of the world.

An update on wholesale prices is due later Thursday with the release of the Producer Price Index for August. It measures the prices businesses pay for goods before they reach customers.

That report will be followed up Friday with the release of the Consumer Price Index, or CPI, for August, which shows the more direct price impact for households.

The latest reports are expected to show that the rate of inflation remains above 3 per cent, above the Federal Reserve's target rate of 2 per cent.

Elsewhere on Wall Street, shares of Meta Platforms rose 6.6 per cent as the parent company of Instagram and Facebook launched a personal artificial intelligence agent, Muse, for people 18 and over who are looking for help with day-to-day tasks like schedules and shopping.

Rising Treasury yields in the bond market were also weighing down stocks on Wall Street Wednesday.

The US Treasury Department said Wednesday that it would buy back up to USD 6 billion in long-term debt. That follows an announcement in August previewing plans for an unusually large buyback in an effort to contain rising yields, which make it more expensive for US companies to borrow money and also weigh down other investments, such as stocks.

Bond yields were holding steady prior to the announcement, but gained ground shortly after.

In other dealings early Thursday, the US dollar fell to 153.42 Japanese yen from 153.54 yen. The euro rose to USD 1.1640 from USD 1.1632.