SYDNEY – Asian markets were slightly weaker on Oct 7 as investor confidence showed signs of flagging, while oil prices rose due to a storm threat in the Gulf of Mexico and escalating Saudi-Houthi tensions.
In Asia, MSCI’s broadest index of Asia-Pacific shares excluding Japan was down 0.5%, led by declines in Hong Kong and Singapore after US stocks ended higher. The index is up 0.9% so far in October.
The S&P 500 hit a fresh record on Oct 6, up about 0.6% on the day, while the tech-heavy Nasdaq gained 0.4%, also an all-time high. The Dow Jones Industrial Average rose 0.5%.
In Asian trading, US crude ticked up 0.9% to US$90.2 a barrel; prices were little changed in the international session. Brent crude rose 1% to US$101.58 per barrel.
The price rise came as commodity investors weighed supply constraints from a storm heading for North American oil-producing regions and Houthi attacks on Saudi Arabia against increased supplies of Middle East crude.
Around 12 million barrels per day (bpd) of crude oil and 2 million bpd of refined products have left the Middle East on tankers in the last seven to 10 days, commodities trading giant Vitol’s CEO Russell Hardy said on Oct 6.
US equities were showing signs of losing momentum as global bond yields resumed their ascent on Oct 7. S&P 500 e-mini futures rose 0.1% for the fifth day of gains, but failed to surpass an intraday high set the previous session.
Heavily sold French bond futures ticked down in Asia to retrace some of the previous session’s rebound as far-right presidential candidate Marine Le Pen pledged spending cuts and a reduction in the country’s budget deficit.
Ten-year French yields fell more than 11 basis points (bps) on Oct 6 and the spread between French OATs and German bunds, which hit almost 160bps last week, according to LSEG data, narrowed to 132bps.
“The magnitude of the move is striking given the 2027 election remains several months away and France’s deteriorating fiscal dynamics are hardly new,” said Laura Cooper, Nuveen’s head of macro credit and global investment strategist.
“What has changed is sharply higher yields, leaving investors less willing to look through those vulnerabilities.”
The resumption of investor concerns weighed on the euro, which slipped 0.3% to US$1.1229.
US Treasury auctions to show depth of demand
The yield on the US 10-year Treasury bond was up 3.8bps at 5.307% in Asian trade ahead of an auction of notes of the same maturity later in the session and a 30-year auction on Oct 8.
The auctions will show the depth of investor demand for US debt, analysts said. US longer-dated yields hit a 24-year high on Oct 5 amid a persistent sell-off since late August due to inflation and debt concerns.
Australian shares were down 0.1% on Oct 7, while Japan’s Nikkei stock index was off 0.8%.
Hong Kong’s Hang Seng Index was down 0.5% in afternoon trading, dragged lower by a decline of as much as 4.1% in the city’s biotech gauge. Mainland China’s financial markets remained closed for a holiday.
Indian stocks slipped 0.5% as the Reserve Bank of India hiked interest rates for the first time in nearly four years to rein in rising inflation. The central bank raised its benchmark by 25bps to 5.5%, as expected by a majority of economists polled by Reuters.
The dollar index, which measures the greenback against a basket of currencies, rose 0.1% to 102.06 following a 0.27% slide in the prior session.
The Japanese yen weakened 0.2% to 158.41 per US dollar. Sterling dipped 0.2% to US$1.3248.
The Federal Reserve on Oct 7 will publish the minutes of its Sept 15 and 16 policy meeting, which will be scrutinised for potential rate moves over the next few months.
Traders scaled back expectations of a Fed rate increase in October to 19% from about 50% a week earlier.
Spot gold was down 0.6% at US$4,137.29 per ounce. REUTERS
