TOKYO, Aug 12 — Oil and gold prices climbed today as geopolitical tensions ratcheted up ahead of key United States inflation data.
The yen slid against the US dollar, having unwound much of its gains following rare intervention in currency markets by Japan and the US. The regional share benchmark rose, led by gains in South Korean stocks.
The US and Yemen’s Iran-aligned Houthis reported separate attacks on shipping, while Asia was rattled by an early morning missile launch by North Korea. Markets remained focused on US consumer price index data later in the session for signals of timing for a potential Federal Reserve rate hike.
“Market sentiment is lukewarm amid lingering geopolitical risk and as market participants head into US CPI data,” Kyle Rodda, a senior financial market analyst at Capital.com, wrote in a note.
“The lack of substantial news or progress in talks, with Iran doubling down on its commitment to govern the Strait of Hormuz, is keeping the risk for oil prices skewed to the upside and US indices on hold,"”he added.
US crude rose 0.61 per cent to US$83.71 a barrel and Brent rose to US$89.46 per barrel, up 0.62 per cent on the day and poised for a sixth straight daily gain. Both benchmarks settled more than US$1 higher yesterday, marking their highest closes since July 31 and extending gains after jumping about 5 per cent on Monday.
Spot gold rose 0.77 per cent to US$4,400.44 an ounce, while spot silver rose 1 per cent to US$65.30 an ounce. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.8 per cent, while Japan’s benchmark Nikkei share gauge rose 0.8 per cent as the market reopened after a holiday. South Korea’s Kospi surged 4 per cent, driven by gains in tech shares.
Four crew members of an Egyptian-owned ship were killed in an attack by Houthis yesterday, Yemen’s Transport Ministry said, while the US military said it struck a container ship attempting to sail toward an Iranian port. The fatalities would mark the first from a Houthi strike on shipping since the Iran war began on February 28.
The war shows no signs of ending despite repeated claims from US President Donald Trump of an imminent deal.
A North Korean ballistic missile fired off the Korean Peninsula’s east coast came days ahead of major joint military exercises by Seoul and Washington long denounced by Pyongyang. Meanwhile, Taiwan condemned planned naval drills between China and an Indonesian warship off the island’s east coast.
Today’s CPI data will not capture the most recent rise in energy costs, but it could still prove instrumental in setting expectations for the Fed’s meeting next month, with money markets showing an even chance of a hike.
Fed Bank of Boston president Susan Collins said she would back a September interest rate rise if inflation remains high, the Financial Times reported.
Consumer prices are expected to edge up 0.1 per cent in July after falling 0.4 per cent in June, according to a Reuters poll. Annual CPI inflation is forecast to slow to 3.4 per cent from 3.5 per cent a month earlier.
“Everyone’s got their eyes on the CPI report,” Skye Masters, head of markets research at National Australia Bank, said on a podcast. “If you do see the print coming in at zero, I think you’ll obviously see a reasonable rally in Treasuries as the market unwinds expectations for the Fed tightening.”
Markets are also increasingly pricing in an early rate hike in Japan, putting pressure on the nation’s shorter-dated bonds. The yield on the five-year Japanese government bond rose to 2.12 per cent, a record high, while the two-year yield reached a 31-year peak of 1.645 per cent.
The dollar index, which measures the greenback against a basket of currencies,rose 0.07 per cent to 99.88. The euro edged 0.05 per cent lower to US$1.1534, while sterling was flat at US$1.3504.
The yen weakened 0.08 per cent to 159.38 per dollar, remaining off last week’s high of 155.20 after several suspected rounds of intervention.
In early European trades, the pan-region Euro Stoxx 50 futures were flat at 6,573, German DAX futures slid 0.04 per cent at 26,468, while FTSE futures slid 0.19 per cent at 10,831. US stock futures, the S&P 500 e-minis, were up 0.13 per cent at 7,757.3.
