Hong Kong shares soared while other Asian markets pulled back on Wednesday amid escalating tensions in the Middle East.
Oil prices saw an increase following Iran's missile attack on Israel, heightening concerns over potential disruptions to supplies. This news overshadowed a positive report indicating that US job openings unexpectedly rose in August, demonstrating the continued resilience of the American labour market.
However, regional trading was sparse, with mainland Chinese markets closed for a week-long national holiday. In Tokyo, the Nikkei 225 fell by 2.2% to 37,808.76.
The index has been on a downward trend since the ruling Liberal Democratic Party selected Shigeru Ishiba as the new government leader, replacing Fumio Kishida, who stepped down on Tuesday. Rising energy costs in Japan, which heavily relies on imported oil, gas and coal for its industries, will add to Ishiba's challenges as he strives to boost the economy.
Meanwhile, Hong Kong's Hang Seng surged by 5.7% to 22,320.76, buoyed by investor optimism over recent measures by Beijing to stimulate the Chinese economy through policies aimed at reviving the struggling property sector and supporting financial markets. With Shanghai and other Chinese markets closed, trading concentrated in Hong Kong. Shares in China Vanke, a real estate developer affected by a borrowing crackdown that plunged the industry into a slump, traded in Hong Kong jumped by 10%.
Longfor Holdings Group soared by 19.8%, and appliance maker Midea surged by 4.2%. Australia's S&P/ASX 200 tipped just slightly, down by 0.1% to sit at 8,198.20, while the Kospi in Seoul took a sharper tumble, losing 1.2% to 2,561.69.
Meanwhile, across to the United States on Tuesday, stocks slid back from their lofty heights; the S&P 500 dipped by 0.9% to close at 5,708.75. The Dow Jones followed suit, edging down by 0.4% to land at 42,156.97, with the tech-heavy Nasdaq Composite shedding a more significant 1.5% to finish at 17,910.36.
From the White House, National Security Adviser Jake Sullivan labelled Iran’s missile attack a "significant escalation," whilst also noting that it was "defeated and ineffective." With Israel not on the list of major oil producers but Iran firmly on it, rising tensions suggest potential impacts on other oil-producing neighbours.
Benchmark US crude experienced a 5% surge before settling at a 2.4% increase. Brent crude, the globally recognised yardstick, enjoyed a comparable ascent, up by 2.6%. In early Wednesday trade, the price for US crude was up another notch by $1.02, standing at $70.85 per barrel, while Brent crude saw a lift of $1.01 to $74.57.
Amid these oil ebbs and flows, energy companies on Wall Street enjoyed robust gains; ConocoPhillips jumped by 3.9%, closely followed by Exxon Mobil's climb of 2.3%.
Shares of defense contractors also rallied. Northrop Grumman rose 3%, and RTX added 2.7%. RTX partners with Israeli company Rafael Advanced Defense Systems to make the “Iron Dome” air defense system that Israel’s government uses.
However, despite these upticks, most US shares fell overall. The S&P 500 reached a record high on Monday, marking its 43rd peak this year. Stocks have been surging on optimism that the US economy can continue to expand despite a slowdown in the job market, as the Federal Reserve slashes interest rates to stimulate growth.
Last month, the Fed cut its main interest rate for the first time in over four years and has signalled further reductions through next year. The key question looming over Wall Street is whether these cuts will be too little, too late after the Fed previously maintained rates at a two-decade high in an attempt to curb high inflation.
A disheartening report emerged on Tuesday, revealing US manufacturing declined more than anticipated in September. Another potential risk to the economy could come from a strike by dockworkers at 36 ports across the eastern United States, which could disrupt supply chains and fuel inflation.
The workers are demanding a labour contract that prevents automation from replacing their jobs, among other things. Supply chain experts suggest consumers won't feel an immediate impact as most retailers have already stocked up on goods, advancing shipments of holiday gift items.
Meanwhile, an encouraging update from Europe showed inflation among the 20 countries using the euro fell below 2% in September, the first time this has occurred in over three years. This could provide the European Central Bank with the flexibility to cut interest rates more swiftly.
The dollar was trading at 143.86 yen, up from 143.57 yen late Tuesday. The euro slipped to $1.1067 from $1.1070.
