Asia shares weaker, oil up; investors weigh Saudi-Houthi escalation

Asian markets edged lower on Wednesday despite US stocks reaching new highs, as oil prices climbed due to a storm threatening the Gulf of Mexico and tensions rising between Saudi Arabia and Yemen's Iran-backed Houthis. MSCI's Asia-Pacific index excluding Japan fell 0.3%, trailing US equities that ended higher. The MSCI index was up 1.5% this month.

The S&P 500 hit a fresh high, while the tech-heavy Nasdaq also achieved an all-time high. The Dow Jones rose 0.5%. In Asia, US crude rose 1.05% to $90.38 a barrel, while Brent crude gained 1.06% to $101.65 per barrel. Around 12 million barrels of crude oil and 2 million barrels of refined products have been shipped from the Middle East via tankers in the past week.

Vitol's CEO Russell Hardy noted that Saudi Arabia has lost about 12 million barrels of crude oil and 2 million barrels of refined products in the last 7 to 10 days. The positive sentiment in US equities followed a stabilisation in global bond yields overnight. French debt, which was heavily sold, rebounded when far-right candidate Marine Le Pen announced budget cuts.

The euro slightly rebounded and stabilized near $1.1250. US 10-year Treasuries rose back to 5.3% in Asian morning trade. US longer-dated yields climbed ahead of auctions later in the session. The US dollar index rose 0.03% to 101.94, while the Japanese yen weakened 0.19% to 158.43 per dollar. Sterling slipped 0.08% to $1.3262. Traders have scaled back expectations of a Fed rate increase this month to 19% from about 50% a week earlier. Spot gold climbed to $4165.53 per ounce.