Asia shares mixed as Nikkei heads for worst week in a month on oil fears
The divergence between Japan and Korea on Friday captures how differently regional markets are digesting the same set of global pressures. Japan’s slide reflects a fairly direct read-through from rising oil prices and bond yields into inflation and rate expectations, a sensitivity that has been building through the week as Middle East tensions escalate. Korea’s reversal, by contrast, shows chip sector strength from overnight US peers outweighing the same macro headwinds that hit Japan, at least for one session, though the index remains on track for a weekly loss overall. With Bessent’s sanctions threat adding a fresh layer of uncertainty into an already tense standoff, oil price volatility looks set to remain the dominant swing factor for regional equities heading into next week.
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Earlier:
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Oil driven inflation fears knocked Japanese stocks lower, while Korean chipmakers gave the KOSPI a same-day reprieve.
Summary:
- Japan’s Nikkei eased around 0.3% at the midday recess, putting it on track for a weekly loss of circa 4%, its worst week since mid-July
- The broader Topix slipped around 0.1%, heading for a weekly decline of circa 3.5%
- Treasury Secretary Scott Bessent said the US would impose its toughest sanctions in history on Iran, as Washington escalated economic pressure to end the nearly six-month war
- Crude oil jumped around $2 overnight, lifting Japanese bond yields and stoking inflation concerns
- South Korea’s KOSPI opened down circa 1.5% near 6,750 amid weaker US markets and rising global bond yields, before reversing to trade up around 0.5% as chipmakers tracked overnight gains in US peers
- The KOSPI remains on track for a weekly decline of circa 1%
Japan’s Nikkei share average slipped Friday, putting the index on course for its worst week in more than a month, as uncertainty over the Middle East conflict pushed oil prices higher and revived inflation concerns. The Nikkei eased around 0.3% as of the midday recess, setting up a weekly loss of circa 4%, the steepest since the week ended July 17. The broader Topix declined around 0.1%, on track for a weekly slide of circa 3.5%.
The pressure on Japanese equities followed comments from US Treasury Secretary Scott Bessent, who said Thursday that Washington would impose its toughest sanctions in history on Iran, as the US ramped up economic threats aimed at ending the nearly six-month war. Crude oil jumped around $2 overnight on the news, a move that fed directly into Japanese bond yields, which rose on renewed inflation concerns. With oil prices and bond yields both elevated heading into the weekend, traders pointed to profit taking as a likely factor compounding the slide, given the uncertain trajectory of the Middle East situation.
South Korean shares told a different story over the course of the session, though they started on a similarly weak footing. The KOSPI opened down circa 1.5%, near the 6,750 level, weighed down by weaker overnight US markets and rising global bond yields, the same broad pressures affecting Japan. The index reversed course as the day progressed, however, with chipmakers tracking overnight gains among their US peers to pull the KOSPI into positive territory, up around 0.5% on the day. Despite the intraday recovery, the index remains on track to end the week lower, down circa 1% for the five day period, underscoring that the broader macro headwinds pressuring regional markets have not fully eased even as individual sectors find pockets of support.
This article was written by Eamonn Sheridan at investinglive.com.