Asian stock markets fall amid surge in oil prices
Asian stock markets fell on Monday, September 14, amid a new jump in oil prices and expectations of possible interest rate hikes in the United States and Japan. According to Channel NewsAsia, futures on Japan’s Nikkei index lost 2% to stand at 63,260 points, while S&P 500 futures fell by 0.5% and Nasdaq futures by 1%.
Oil rises on supply risks
Brent crude futures rose by 3.1% to $107.84 per barrel, following an almost 9% increase over the previous week. U.S. crude gained 2.8% to $102.85 per barrel.
Markets reacted to reports of new strikes on Saudi Arabia and vessels in the Persian Gulf. Following an attack on an oil pipeline in Saudi Arabia and the advance of Yemen’s Houthis, concerns intensified over wartime disruptions to global energy supplies. A meeting scheduled for Monday in Oman between representatives of Iran and the Arab Gulf states on an agreement to open the Strait of Hormuz was postponed.
Analysts point to risks for shipping through the Strait of Hormuz and the Bab el-Mandeb Strait, which could keep oil prices high for a prolonged period and fuel global inflation.
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Investors await central bank decisions
After U.S. consumer price data were released on Friday, the market put the probability of the Federal Reserve raising its rate by 25 basis points on Wednesday at 86%. Market participants also expected another increase by December. This could be the Fed’s first rate hike since mid-2023.
JPMorgan’s chief U.S. economist Michael Feroli said the bank now expects two rate hikes this year, in September and December. At the same time, he noted that the further trajectory of monetary policy would depend on new macroeconomic data.
The market was also pricing in an approximately 76% probability that the Bank of Japan would raise its rate by a quarter of a percentage point on Friday, to 1.25%. The dollar traded at 153.77 yen, having lost about 4% over the previous two weeks. Gold fell by 0.3% to $4,336 per ounce, as rising bond yields reduced the appeal of the non-interest-bearing asset.
