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Oil prices rose and stocks fell Wednesday amid fresh concerns over Middle East supplies after warnings that Iran appeared to be stepping up attacks in the Strait of Hormuz.
The retreat in Asian equities came even as investors brushed off another record session on Wall Street, where the Nasdaq and S&P 500 were boosted by renewed enthusiasm for the artificial intelligence trade, with chip giant Nvidia pushing towards a $6 trillion market capitalisation.
Investor confidence had received a boost earlier this week after reports indicated that oil exports from the Middle East, excluding Iran, were recovering towards pre-war levels.
That helped push global benchmark Brent crude below $100 a barrel and West Texas Intermediate below $90, easing inflation concerns and giving central banks some room to delay further interest-rate hikes.
However, both contracts rebounded on Tuesday and continued higher in early Asian trade after figures indicated that Tehran had increased attacks on tankers in the strategically important Strait of Hormuz.
UK Maritime Trade Operations said there had been nine attacks so far this month, equivalent to half the total recorded in the waterway and the Persian Gulf combined during September.
Meanwhile, Yemen’s Houthis claimed an attack on Riyadh’s main airport and denied reports that the group had been pushed back by government forces, which have launched a major operation to recapture lost territory.
The Houthi statements came as Yemen’s military said it had removed the Iran-aligned group from areas around the Bab al-Mandab Strait, a key Red Sea chokepoint, and the port city of Mocha.
The latest developments came as senior oil officials warned that global stockpiles were running low, limiting governments’ ability to cushion the impact of the crisis.
“Reports of increased flows across the region have offered some downside pressure on crude, but this has been offset by varying reports around the scale of attacks on vessels moving through the Strait,” said Chris Weston of Pepperstone.
“For now, the market remains highly sensitive to headlines and geopolitical risk.”
Equities fell after an upbeat start to the week, with Tokyo, Hong Kong, Singapore, Seoul, Wellington and Taipei all trading lower. Sydney and Manila, however, edged higher.
Asian traders failed to carry forward the momentum from their US counterparts, who continued piling into technology stocks ahead of the latest earnings season.
Analysts expect S&P 500 companies to report a roughly 25 percent year-on-year increase in profits, according to data compiled by Bloomberg Intelligence.
The Nasdaq and S&P 500 reached fresh records, helped by further gains in Nvidia, whose market capitalisation climbed to almost $5.7 trillion.
Investors were also encouraged by a Financial Times report that SpaceX was considering raising $40 billion to purchase Nvidia chips.
The latest surge comes despite a summer sell-off in technology stocks, when concerns mounted that the huge sums invested in artificial intelligence may have been excessive, with investors questioning when — or whether — those investments would generate returns.
Key figures at around 0230 GMT:
Tokyo — Nikkei 225: DOWN 0.9 percent at 70,074.13 (break)
Hong Kong — Hang Seng Index: DOWN 0.7 percent at 24,108.15
Shanghai — Composite: Closed for a holiday
Dollar/yen: UP at 158.38 yen from 158.17 yen on Tuesday
Euro/dollar: DOWN at $1.1234 from $1.1257
Pound/dollar: DOWN at $1.3251 from $1.3275
Euro/pound: DOWN at 84.78 pence from 84.81 pence
West Texas Intermediate: UP 1.0 percent at $90.29 per barrel
Brent North Sea Crude: UP 0.9 percent at $101.48 per barrel
New York — Dow: UP 0.5 percent at 51,521.28 (close)
London — FTSE 100: UP 0.4 percent at 10,541.69 (close)