HONG KONG (AP) - Asian shares exhibited a mixed performance and oil prices saw an uptick on Wednesday amid rising tensions in the Middle East that adversely affected Wall Street.
U.S. benchmark crude oil experienced an increase of 24 cents, reaching $73.51 per barrel. Similarly, Brent crude, the international benchmark, rose by 28 cents to $76.71 per barrel. The surge in crude prices, which gained over 4% on Tuesday, followed U.S. President Donald Trump’s abrupt departure from a Group of Seven summit in Canada. He warned that residents of Iran's capital should evacuate without delay. Trump's statements shifted dramatically within a short timeframe, moving from suggesting that a nuclear deal with Iran was still "achievable" to urging the evacuation of Tehran's 9.5 million inhabitants.
This escalation in conflict has led to increased crude oil and gasoline prices, as Iran is a significant oil exporter and controls the strategic Strait of Hormuz, through which a substantial portion of the world's oil is transported. Historically, conflicts in this region have caused temporary spikes in oil prices, though these spikes have often subsided once it became clear that oil flow was not significantly disrupted.
In economic reports, Japan noted a decline in exports for May, attributed mainly to Trump’s higher tariffs, with exports to the U.S. falling by over 11%. Despite this, Tokyo’s Nikkei 225 rose by 0.7% to 38,803.10. Conversely, Hong Kong's Hang Seng index fell by 1.2% to 23,695.62, while the Shanghai Composite Index dipped by 0.2% to 3,380.47.
The Kospi index in Seoul saw a 0.6% gain, closing at 2,967.89, whereas Australia's S&P/ASX 200 recorded a slight decline of 0.2%, settling at 8,528.50. U.S. stocks, however, faced challenges on Tuesday, with prices dropping in response to higher oil costs and weaker-than-expected retail sales data for May. The S&P 500 dropped 0.8% to 5,982.72, the Dow Jones Industrial Average fell 0.7% to 42,215.80, and the Nasdaq composite fell by 0.9% to 19,521.09.
Trump further intensified the situation between Israel and Iran by proclaiming “UNCONDITIONAL SURRENDER!” via his social media platform and mentioning that the U.S. would not assassinate Iran’s leader "at least for now." The rising oil prices could potentially benefit companies within the solar industry by incentivizing a shift towards alternative energy sources. However, solar stocks plummeted on concerns that Congress might phase out tax credits for solar and wind energy, which are considered more environmentally friendly.
Specifically, shares of Enphase Energy fell by 24%, while First Solar experienced a significant drop of 17.9%. Treasury yields also decreased after a report indicated a drop in consumer spending at U.S. retailers compared to the previous month. Sustained solid spending has been pivotal in preventing a recession; however, May’s decline could signify a return to more typical spending patterns after a surge in April, when many consumers rushed to purchase vehicles ahead of Trump's tariffs.
In notable corporate news, Verve Therapeutics saw a significant increase in its stock price, soaring by 81.5% after Eli Lilly announced plans to acquire the company, which is focused on developing genetic treatments for cardiovascular diseases, in a $1 billion deal that might reach $1.3 billion under certain conditions. Conversely, Eli Lilly's stock fell by 2% in the aftermath of the announcement.
This market activity coincided with the beginning of a two-day Federal Reserve meeting concerning interest rates. The prevailing sentiment among traders and economists is that the Fed is unlikely to make any immediate changes. The Fed has remained cautious about making any adjustments to interest rates, particularly as it continues to monitor the economic impact of Trump's tariffs and accompanying inflation concerns. Currently, inflation rates are hovering near the Fed’s target of 2%.
In the foreign exchange market, the U.S. dollar decreased against the Japanese yen, falling to 145.09 yen from 145.29. The euro gained some ground, rising to $1.1498 from $1.1480.
