Most Asian stocks fell on Friday as markets remained on edge amid little de-escalation in the U.S.-Israel war on Iran, with the conflict’s inflationary effects being a key point of concern.
Regional markets took a weak lead-in from Wall Street, which fell sharply overnight as markets feared that energy-fueled inflation will deter the Federal Reserve from cutting interest rates any time soon.
S&P 500 Futures rose 0.4% by 22:12 ET (02:12 GMT), with oil prices also falling in Asian trade after the U.S. announced more waivers on Russian oil to offset supply shocks from the Iran war.
Oil was sitting on strong gains this week with Brent remaining close to $100/barrel, while most Asian stocks were headed for weekly declines.
Japan, South Korea lead losses as Iran fears persist
Japan’s Nikkei 225 and South Korea’s KOSPI indexes were the worst performers for the day, losing about 1.2% apiece. Japan’s broader TOPIX shed 0.6%.
The Nikkei was also weighed by an over 6% slide in Honda Motor Co Ltd (TYO:7267), after the Japanese automaker forecast an annual loss due to restructuring costs associated with its electric vehicle business.
The Nikkei was trading down 3.3% this week, while the KOSPI was headed for a 1.4% decline.
Asian markets were pressured by concerns over oil supply disruptions stemming from the Iran conflict, especially as Tehran blocked the Strait of Hormuz in response to U.S. and Israeli aggression.
The region is heavily dependent on oil supplies from the Middle East, with a prolonged supply outage expected to cause widespread economic disruptions.
Japan, South Korea, and India are seen as among the most exposed, given their reliance on oil imports. India’s Nifty 50 index was headed for a 2.4% loss this week.
China shares steady, set for weekly outperformance
Chinese shares fared better than their Asian peers this week, with the country seen relatively well-insulated from near-term oil supply shocks.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose slightly on Friday, and were sitting on mild gains for the week.
Hong Kong’s Hang Seng index fell 0.2% and was nursing a 0.3% loss this week, amid some weakness in local technology names.
OCBC analysts said in a recent note that China’s massive oil stockpiles, plus the country’s pivot into renewables and electric vehicles, largely insulated the country against near-term disruptions in oil supplies.
China imports roughly 15% of its oil from Iran. The country had earlier this week announced an immediate ban on all refined fuel exports to quell a domestic supply shortage.
Other Asian markets rose slightly on Friday. Australia’s ASX 200 rose slightly, but was nursing an over 2% loss this week, amid growing conviction that the Reserve Bank of Australia will hike interest rates by 25 basis points next week.
Singapore’s Straits Times index rose 0.2% and was set for a 0.3% gain this week.
Source: Investing