Oil prices spiked nearly 2% on Wednesday after CNN reported that U.S. intelligence suggests Israel may be planning a strike on Iranian nuclear facilities, significantly heightening fears of a broader Middle East conflict. The geopolitical jitters boosted safe-haven gold, which rose almost 2%, while most Asian equity markets continued to build on recent gains despite the news.
The potential escalation underscores rising stakes in the stalled U.S.-Iran nuclear talks, with Westpac’s Robert Rennie noting that crude will likely maintain a risk premium while negotiations remain at a standstill. Oil prices have already risen around 15% this month amid easing global economic concerns and moderating trade tensions.
Despite the oil shock, Asian stocks generally performed well. Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei, and Manila advanced, while Tokyo and Singapore lagged. The optimism comes after recent signs of thawing trade relations between the U.S. and China, including temporary tariff rollbacks announced last week.
However, that fragile détente was shaken on Wednesday when Beijing accused Washington of “bullying” over its chip export controls and vowed retaliatory measures to protect its tech sector. The move follows new U.S. guidelines warning companies about using Chinese-made AI semiconductors, particularly from Huawei.
Meanwhile, multiple Federal Reserve officials struck a cautious tone on U.S. interest rates. St. Louis Fed President Alberto Musalem warned that Trump’s tariffs could hurt growth and jobs, arguing against any hasty rate cuts. Atlanta Fed President Raphael Bostic also pointed to market uncertainty stemming from credit downgrades and potential tax changes, suggesting rates may need to remain elevated.
Key Market Figures (as of 0230 GMT):
- WTI Crude: Up 1.9% to $63.22
- Brent Crude: Up 1.8% to $66.56
- Gold: Up nearly 2%
- Hong Kong Hang Seng: Up 0.5% to 23,806.59
- Shanghai Composite: Up 0.2% to 3,386.46
- Tokyo Nikkei 225: Down 0.1% to 37,491.80
- Euro/USD: Up to $1.1322
- Pound/USD: Up to $1.3425
- Dollar/Yen: Down to 144.07
- New York Dow Jones: Down 0.3% to 42,677.24
- London FTSE 100: Up 0.9% to 8,781.12
