Asian shares fall as oil tops USD 111 barrel, Wall Street slumps

Shares retreated Thursday in Asia after stocks on Wall Street slumped as oil prices spiked at more than USD 110 a barrel. US stocks also sagged due to a report that said inflation was primed to worsen even before the war with Iran sent oil and gas prices spiking.

That, and comments from the head of the Federal Reserve, led investors to expect there’s less chance of getting the lower interest rates that they love. Tokyo’s Nikkei 225 fell 2.5 per cent to 53,875.94 and the Kospi in South Korea lost 1.3 per cent to 5,845.62.

In Hong Kong, the Hang Seng slipped 0.2 per cent to 25,725.77, while the Shanghai Composite index shed 0.9 per to 4,027.73. Australia’s S&P/ASX 200 lost 8,504.20 and Taiwan’s Taiex fell 1.2 per cent.

Brent crude, the international standard, was trading at USD 111.24 a barrel, up 3.6 per cent from a day earlier. US benchmark crude oil gained 0.8 per cent to USD 96.80 a barrel. On Wednesday, the S&P 500 fell 1.4 per cent and flipped to a loss for the week so far. The Dow Jones Industrial Average dropped 768 points, or 1.6 per cent, and the Nasdaq composite slid 1.5 per cent.

The losses deepened after the Fed decided to keep its main interest rate steady, instead of resuming cuts meant to give the job market and economy a boost. “We just don’t know,” Fed chair Jerome Powell said about what will happen with oil prices, along with how long President Donald Trump’s tariffs will take to work their way fully through the system.

Oil prices have soared because the war has disrupted the Persian Gulf’s energy industry. Iran’s state television said Wednesday that the Islamic Republic would be attacking oil and gas infrastructure in Qatar, Saudi Arabia and the United Arab Emirates after an attack on facilities associated with its offshore South Pars natural gas field.

If the disruptions keep oil and gas prices high for long, they could create a debilitating wave of inflation for the global economy.

A report released Wednesday morning showed inflation pressures were already building before the war began. It said inflation at the US wholesale level unexpectedly accelerated last month to 3.4 per cent.