Asia Stocks Stumble on Risk-Off Mood, Oil Prices Climb

Asia Stocks Stumble on Risk-Off Mood, Oil Prices Climb

Asian shares retreated on Friday as hawkish comments from some Federal Reserve officials and escalating geopolitical tensions put a dent in risk sentiment. Traders were cautious ahead of U.S. jobs data due later in the day. The threat of supply disruptions owing to a prolonged conflict in the Middle East kept Brent futures above $90 a barrel. Israel braced for a possible retaliatory attack after its suspected killing of Iranian generals in Damascus. U.S. President Joe Biden threatened to condition support for Israel’s offensive in Gaza on it taking steps to protect aid workers and civilians. Asian shares outside Japan fell 0.5%, tracking a late tumble on Wall Street. Tokyo’s Nikkei fell more than 2%, pressured in part by a stronger yen. Traders were hesitant to take on new positions ahead of the U.S. nonfarm payrolls report. Solid U.S. economic data stoked doubts about the pace and scale of Fed easing, although rate cuts were likely to commence this year. Some Fed officials have taken a more conservative view on easing required in light of a still-resilient U.S. economy. The comments from Fed officials supported the dollar against a basket of currencies. Fed fund futures currently point to just under 75 basis points worth of easing this year. U.S. Treasuries struggled, with the 10-year yield near its highest in more than three months. Brent rose to more than five-month high. Gold retreated from a record high.

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