Market Reactions: Oil Prices Dip and Asian Shares Mostly Lower

The trading day saw oil prices decline on Wednesday as Asian shares generally exhibited a downward trend. South Korea’s Kospi index continued its fall, dropping over 16% across the preceding two days. Volatility in crude prices persisted after the U.S. announced targeted military strikes against Iran. This move follows an attack on a U.S. base.

U.S. stock futures showed slight gains after previous losses on Wall Street. In South Korea, the Kospi’s recent declines, especially noticeable amid the global AI boom, prompted analysts to question substantial investments by major tech firms in AI infrastructure. On Thursday, it further slipped by 1.3% to 5,587.82, after losing 10.8% on Tuesday and approximately 6% on Wednesday. Despite falling over 35% from its high of over 9,000 in June, the index remains about 30% higher compared to the start of the year.

In contrast, Samsung Electronics’ shares rose 2.4% after reporting record operating profits, aligning with expectations. However, SK Hynix’s shares fell by 4% following a 9% drop on Wednesday despite a steep rise in quarterly profits that did not meet anticipation, causing investors to offload shares.

In Tokyo, the Nikkei 225 increased by 0.6% to 61,778.02. SoftBank Group, an Open-AI investor, fell 2.7%, while electronic component manufacturer Tokyo Electron gained 4.4%. Memory chipmaker Kioxia Holdings surged 7.5%.

Taiwan’s Taiex index climbed 0.8%, buoyed by the AI wave. Taiwan Semiconductor Manufacturing Company (TSMC) rose by 1.8%. Meanwhile, Hong Kong’s Hang Seng index fell slightly by less than 0.1% to 25,779.70, and the Shanghai Composite dropped 1.2% to 3,784.55. Australia’s S&P/ASX 200 declined by 0.9% to 8,959.90. India’s Sensex edged up slightly, less than 0.1%.

Oil prices remained under pressure on Thursday while U.S. and Iran tensions heightened. U.S. President Donald Trump stated a firm response to Iran’s targeting of a U.S. base in Jordan, impacting maritime activity in the Strait of Hormuz, a vital oil passage. Brent crude decreased 1% to $87.18 per barrel. The benchmark had surged from around $72 per barrel in late February before hostilities began. U.S. crude fell 0.9% to $83.74 per barrel.

On Wednesday in the U.S., the S&P 500 dropped 1.5% to 7,316.15, the Dow Jones Industrial Average fell 2.2% to 51,594.14, and the Nasdaq composite lost 1.7% to 24,442.94. Notable declines occurred for chipmaking giants, with Nvidia down 3.6%, AMD slumping 5.5%, and Broadcom declining 2.8%.

U.S. markets also reacted to the Federal Reserve’s decision to keep interest rates unchanged, amid some committee members advocating a rate hike. Federal Reserve Chairman Kevin Warsh emphasized an ongoing commitment to bringing inflation back to 2%, though clarity on future interest rate actions remains limited. This uncertainty could lead to more volatile market conditions.

The Fed’s decision did not signify an explicit policy rate change, but it marks the beginning of a broader narrative, as noted by Warsh.

In the bond market, the yield on the 10-year U.S. Treasury increased to 4.70%, up from 4.61% the previous day. The dollar strengthened against the yen, rising to 163.49 from 163.41 yen. The euro slightly decreased, trading at $1.1454, down from $1.1467.

Additional information provided by AP Business Writers Stan Choe and Matt Ott.