Asian stocks under pressure, oil near four-month low as volatility risks highlighted
South Korea's KOSPI, which plunged 10 per cent on Tuesday in their sharpest one-day drop since March, rallied 3.5 per cent, while Japan's Nikkei shed 0.4 per cent and Taiwan stocks lost 1.9 per cent.
A woman walks in front of a screen displaying Evergrande's stock prices among others outside the Exchange Square, after a court ordered the liquidation of China Evergrande Group, in Hong Kong, China January 29, 2024. REUTERS/Lam Yik/File Photo
TOKYO: Asian stocks struggled for direction on Wednesday (Jun 24) while crude oil prices extended declines to hover near four-month lows, as analysts cautioned about renewed volatility from stretched AI valuations and the prospects for US-Iran peace talks.
MSCI's broadest index of Asia-Pacific shares outside Japan was last up 0.4 per cent after swinging gains and losses. South Korea's KOSPI, which plunged 10 per cent on Tuesday in their sharpest one-day drop since March, rallied 3.5 per cent, while Japan's Nikkei shed 0.4 per cent and Taiwan stocks lost 1.9 per cent.
"Price action in markets over the last seven trading days has been alarming, not just when it falls, but also when it rises," said Michael McCarthy, market analyst at Moomoo Securities Australia. "When markets move so rapidly, in either direction, it's a sign of instability."
Oil prices fell more than 1 per cent on Wednesday, extending this week's losses and trading near four-month lows, on signs that more oil tankers stranded in the Gulf are set to move out of the Strait of Hormuz.
Still, uncertainty remains over the durability of the accord. The US and Iran have provided conflicting accounts on what the two countries had agreed on as part of their peace deal, including key elements such as nuclear inspections and control of the Strait of Hormuz.
That gap in perceptions between Washington and Tehran "could become a source of concern going forward", Monex Securities' Yoshitaka Araya said.
Taking cues from Asia, European futures were mostly down. The pan-region Euro Stoxx 50 futures and German DAX futures each fell 0.3 per cent, while FTSE futures lost 0.67 per cent. US futures were largely steady, with S&P 500 E-minis up 0.1 per cent, Nasdaq 100 E-minis 0.2 per cent higher and Dow E-minis flat. The yield on benchmark US 10-year notes fell 0.6 basis points to 4.487 per cent.
Later on Wednesday, memory chipmaker Micron Technology is set to release its earnings, which could offer clues on the outlook for the memory and AI chip sector after a searing rally this year.
In currency markets, the US dollar extended gains to reach a fresh 13-month high against a basket of major currencies, with the dollar index edging 0.07 per cent higher to 101.46.
The dollar’s strength has weighed heavily on the Japanese yen, which traded at 161.53, keeping markets on edge over a potential currency intervention to prop up the battered currency.
A summary of opinions from the Bank of Japan's meeting this month, in which the central bank decided to raise interest rates to a 31-year high of 1.00 per cent, released on Wednesday, showed some board members called for further interest rate hikes to push the central bank's policy rate closer to levels deemed neutral to the economy.
The euro weakened 0.15 per cent at US$1.1364, and sterling eased to US$1.3192.
Spot gold extended losses, down 0.48 per cent to US$4,088.71 an ounce as higher rate expectations reduced the appeal of non-yielding assets.
In cryptocurrencies, Bitcoin gained 0.84 per cent to US$62,914.94. Ethereum rose 0.43 per cent to US$1,669.35.
