Asian shares fell Thursday as oil prices surged to four-year highs due to fears of U.S. strikes on Iran. Tech giants’ positive earnings provided limited relief for investors ahead of Apple’s results.
European stocks are bracing for a lower open, with the pan-regional stock futures gauge down 0.8%. Investors fear higher rates from the European Central Bank and Bank of England later in the day after the Federal Reserve kept interest rates steady.
The Fed showed its most divided decision since 1992, with three board members voting to drop easing bias. Outgoing Chair Jerome Powell confirmed he would stay on as a governor for now to defend the institution’s independence.
Oil prices spiked, causing MSCI’s Asia-Pacific shares outside Japan to slide 1% but still set for a 15% gain this month. Japan’s Nikkei fell 1.4%, while South Korea’s KOSPI hit another all-time high before turning lower.
China’s blue chips were flat, and Hong Kong’s Hang Seng index dropped 1.2%. The Iran conflict remains uncertain, with central banks waiting to see the outcome before decisive steps are taken.
In Asia, Wall Street futures reversed earlier tech-driven gains. Nasdaq futures were down 0.3%. Google parent Alphabet’s shares rose 7% in extended trading, while earnings from Microsoft and Amazon.com raised hopes for Apple. Meta Platforms disappointed, raising its annual capital spending forecast for AI infrastructure, causing its shares to fall.
Global bonds took a beating after the oil spike and hawkish Fed, fueling a sell-off in Treasuries. U.S. Treasury yields rose to a one-month high, while the dollar gained broadly, topping 160 yen. The Japanese currency fell more than 2% since the Iran conflict began on February 28, with investors betting against intervention.
Benchmark US Treasury yields climbed 1 basis point to 4.4298%, having jumped 6 bps overnight to 4.434%. The yield on 10-year Japanese government bonds rose 4 bps to 2.500%, and Australia’s 10-year government bond yields jumped 6 bps to 5.066%.