Tokyo:In early Thursday trading, Asian shares exhibited a mixed performance as investors evaluated fluctuations in oil prices, US bond yields, and currency markets.
According to United News of Bangladesh, Japan's Nikkei 225 index saw a rise of 1.3%, reaching 65,883.41, buoyed by gains in some chipmaking stocks driven by ongoing interest in artificial intelligence. Meanwhile, Australia's S&P/ASX 200 decreased by 0.7% to 8,700.50. In China, Hong Kong's Hang Seng Index fell by 0.5% to 24,715.95, and the Shanghai Composite dropped 0.8% to 3,902.33. Markets in South Korea remained closed due to the Chuseok autumn harvest holiday.
In the energy sector, US benchmark crude oil prices fell by 0.82% to $91.40 a barrel, while Brent crude, the international benchmark, decreased by 0.83% to $102.22 a barrel. Despite this, Brent prices remain significantly higher than the approximately $72 a barrel level seen before the onset of hostilities involving Iran, leading to investor concerns over potential prolonged disruptions in Middle Eastern oil supplies.
On Wall Street, markets were pressured by a stronger-than-expected economic report that heightened inflation concerns, pushing US Treasury yields higher. The S&P 500 index fell by 0.8%, the Dow Jones Industrial Average declined by 352 points, or 0.7%, and the Nasdaq composite dropped by 1.1%. The yield on the 10-year US Treasury note rose to 5.10% from 4.96%, nearing levels last observed in 2007, prior to the global financial crisis.
Rising bond yields can negatively impact stocks and other investments while increasing borrowing costs, potentially slowing economic activity. Recent weeks have seen yields climb due to persistent inflation worries, the US government's significant debt burden, and other economic risks. Inflation concerns were exacerbated by a preliminary report indicating the fastest growth in US business activity in over five years.
In response to sustained inflation, the Federal Reserve raised its short-term interest rate last week for the first time in three years. Fed Gov. Michael Barr suggested further rate hikes might be necessary to achieve the central bank's 2% inflation target.
In currency markets, the US dollar slipped to 157.94 yen from 158.30 yen, while the euro remained relatively stable at $1.1382. The Bank of Japan's recent interest rate hike aimed at supporting the yen had limited impact as it was anticipated by investors. A weaker yen poses challenges for Japan, which heavily depends on imported oil, especially amid high global energy prices.