Asian Markets Slip Amid Middle East Concerns, Oil Prices Surge

Tokyo, Jun 19 (AP) — Asian markets faced a downturn on Thursday due to lingering concerns over the Middle East conflict. President Donald Trump raised tensions with warnings of potential US involvement in the Israel conflict, while Iran's supreme leader dismissed US demands for surrender. Oil prices surged, and US futures fell.

In Asian trading, Japan's benchmark Nikkei 225 dropped 1.0% to close at 38,488.34, though Nippon Steel Corp. saw a 2.3% boost after finalizing its long-delayed acquisition of US Steel.

Hong Kong's Hang Seng index plunged 2.1% to 23,217.07 on aggressive tech stock sell-offs, and the Shanghai Composite decreased 0.8% to 3,362.11.

Australia's S&P/ASX 200 remained stable at 8,523.70, while South Korea's Kospi inched up 0.2% to 2,977.74.

US financial markets will remain closed Thursday in observance of the Juneteenth holiday.

On Wednesday, US stocks had a mixed performance; the Federal Reserve hinted at possibly cutting interest rates twice this year, though this is not definite.

The S&P 500 closed virtually unchanged at 5,980.87. The Dow Jones Industrial Average saw a slight decline of 0.1% to 42,171.66, whereas the Nasdaq edged up 0.1% to 19,546.27. Treasury yields fluctuated but remained stable after the Fed’s projections anticipated a potential decrease in the federal funds rate by the end of 2025. These projections helped alleviate concerns about inflation exacerbated by Trump's increased tariffs.

Lower rates could reduce costs for US households and businesses, potentially enhancing the economy, yet risking increased inflation. Currently, inflation is near the Fed's 2% target. However, economists warn it may take months to gauge the impact of tariffs, and inflation is facing upward pressure from rising oil prices due to the Israel-Iran conflict.

Fed Chair Jerome Powell emphasized the uncertainty surrounding tariffs, explaining that the forecast for two interest rate cuts could deviate significantly from reality. “It’s merely a projection in a very uncertain time,” he stated. Fed officials await clarity on the extent, impact, and potential inflation hike that might result from tariffs, along with their economic consequences.

“The economy’s strength allows us to wait to fully understand the situation,” Powell remarked. “We’ll make wiser decisions by waiting to see how inflation affects spending, hiring, and other factors.”

A report indicated fewer unemployment claims last week, hinting at a drop in layoffs, while another noted a decline in new home constructions, potentially due to higher mortgage rates.

Early Thursday dealings saw US crude rise by 71 cents to USD 74.21. Brent crude, the global benchmark, climbed 76 cents to USD 77.46 per barrel.

Oil prices fluctuate amid fears that the Israel-Iran conflict may affect global oil supply. Iran, a key oil producer, controls the Strait of Hormuz, a vital passage for global crude shipments.

In currency exchanges, the US dollar increased to 145.33 Japanese yen from 145.13 yen. The euro decreased to USD 1.1465 from USD 1.1484. (AP)

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