Asian shares rise as oil’s decline lifts sentiment
Oil’s retreat offers some relief to markets after persistent inflation and elevated yields had weighed on risk appetite
Asian shares surged on Wednesday (August 26) as falling oil prices lifted market sentiment, following a surge in chipmakers, according to wire services. The MSCI's Asia Pacific equities index increased by 1%, with Samsung Electronics and SK Hynix leading the charge. The regional benchmark was on track for a fourth consecutive gain in five sessions.
Chip stocks also rallied on Wall Street, with Nvidia ending a seven-day losing streak before its earnings announcement later that day. Improved sentiment led to US equity-index futures wiping out all losses and trading flat. European shares were expected to rise at the outset.
Brent crude oil dropped 2.6% to approximately US$86.25 a barrel as Iran and Oman discussed an "interim framework" to resume shipping through the Strait of Hormuz. The 8.5% decline in crude over the past week had eased inflation concerns, aiding government bond gains. Treasury yields retreated from a seven-basis-point decline seen on Tuesday. Japanese, New Zealand, and Australian government bonds rose, while Australian bonds fell after an inflation report raised expectations of an interest-rate hike.
Three significant events could influence trading this week: Nvidia's earnings report on Wednesday, providing clues on whether the artificial intelligence (AI) rally can regain momentum; the release of the US Personal Consumption Expenditures gauge on Wednesday; and Federal Reserve Chair Kevin Warsh's Jackson Hole speech on Friday, which could offer insights into the Fed's monetary policy trajectory.
Analyst Kyle Rodda at Capital.com noted that while event risk may cast a slight shadow on the markets, the easing of geopolitical risks and the lower oil price have helped offset trepidation.
In other markets, the Canadian dollar remained steady following Canadian Prime Minister Mark Carney's match of new tariffs imposed by US President Donald Trump and his announcement of support for businesses affected by the trade dispute. The US is considering additional trade measures against Canada in response. Gold slipped 0.3% to US$4,645 an ounce, while Bitcoin hovered around US$79,000.
The AI sector has faced recent pressure as investors question the value of billions spent on the technology. Analysts estimate Nvidia's revenue nearly doubled from the previous year to US$92 billion in its latest quarter, outpacing any of its competitors. Mark Malek at Siebert Financial remarked, "Nvidia is operating on all cylinders and they're doing absolutely everything correctly at this point," anticipating positive outcomes, though many share the same optimism.
Attention will shift to the annual Jackson Hole Symposium on Friday, where Warsh will deliver his first major speech as Fed chair, with investors seeking clarity on his assessment of the US economy and monetary policy direction. Data released on Tuesday showed US consumer confidence fell to a seven-month low in August, with deteriorating outlooks for business conditions and the US labor market.
On Wednesday, investors will focus on the US Personal Consumption Expenditures price index, the Fed's preferred inflation indicator.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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