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Oil rises as Japan stocks surge

Oil prices climbed further on Wednesday as renewed Middle East tensions and stalled US-Iran talks added to concerns over supply disruptions. US equities closed modestly higher on Tuesday, while Asian markets were mixed on Wednesday, with Japan’s Nikkei surging to a record high. US Treasury yields edged higher across the curve, with the 2-year yield around 4.1% and the 10-year yield near 4.5%. The US dollar was little changed, while gold prices were about 0.5% lower on Wednesday, trading around USD 4470 per ounce. Bitcoin fell about 5% to around USD 66,800 on Wednesday, its weakest level since February, as investors appeared to shift money into stronger-performing equity markets and high-profile initial public offerings.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Middle East financial markets
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Oil prices climbed on Wednesday, with Brent crude rising 1.5% to USD 97 a barrel and US West Texas Intermediate also gaining 1.5% to USD 95, extending the previous session’s gains as renewed Middle East hostilities and stalled US-Iran talks lifted the market’s risk premium. Both benchmarks had settled at a one-week high on Tuesday, while the International Energy Agency warned that global inventories could fall to critically low levels before the peak summer demand season. Supply concerns also grew after US crude stockpiles fell by 6.8 million barrels last week, marking a seventh straight weekly decline, according to industry data released on Tuesday.

Japanese stocks hit record high

Asian equities advanced on Wednesday, led by Japan, where the Nikkei 225 jumped 2.9% to a record as investors welcomed fresh fiscal support and continued enthusiasm for artificial intelligence-linked shares. Japan’s cabinet approved a JPY 3.11 trillion supplementary budget on Wednesday to offset higher living costs linked to the Iran war, with subsidies for gas and electricity among the main measures and parliamentary approval targeted by Friday. Elsewhere, China’s CSI 300 was up 1% and Hong Kong’s Hang Seng Index was bucking the regional trend, trading 1.7% lower. The Nifty 50 was also trading 1.1% lower.

Australian GDP growth slows

Australian stocks gained, with the ASX 200 up 1% after data released Wednesday showed the country's economy grew 0.3% in the first quarter from the previous three months. That was slower than 0.8% in the fourth quarter and missed market expectations, while annual growth eased to 2.5% from 2.6%. The loss of momentum reflected weak household spending, lower government consumption and severe weather that disrupted mining activity and exports, although strong investment in data-centre equipment provided some support. The figures come after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.35% last month, its third increase this year, as stronger growth late last year had revived inflation concerns.

US stocks extend record rally

US equities pushed further into record territory on Tuesday, with the Dow Jones Industrial Average up 0.5% at 51,307.79 points, the Nasdaq 100 gaining 0.5% to 30,660.60 points and the S&P 500 adding 0.1% to 7609.78 points, extending its winning streak to nine sessions. AI-related IT and chip shares continued to support sentiment, while broader market momentum was more restrained and investors monitored mixed signals on efforts to resolve the Iran conflict, after US President Donald Trump suggested a framework agreement including the Strait of Hormuz could be reached next week.

US job openings climb in April

In macroeconomic data, US job openings rose to 7.6 million in April from a revised 6.9 million in March, according to data released by the Bureau of Labor Statistics on Tuesday, while hires fell to 5.1 million from 5.5 million and total separations declined to 5 million from 5.4 million. Job openings were up from 7.1 million a year earlier, with the increase driven mainly by professional and business services, while finance and insurance posted a decline. Quits were little changed at 3 million and layoffs and discharges held at 1.7 million, suggesting the US labour market remained relatively stable despite weaker hiring activity.

Euro-area inflation rises on energy

Euro-area annual inflation rose to 3.2% in May from 3% in April, according to flash data released on Tuesday, with energy prices up 10.9% year-on-year after 10.8% in the previous month. Services inflation also accelerated to 3.5% from 3%, while food, alcohol and tobacco inflation slowed to 2% from 2.4%, indicating broader but still uneven price pressures. The increase leaves inflation well above the European Central Bank’s 2% target and strengthens the case for a 25-basis-point interest rate increase at next week’s meeting, as higher oil and gas costs linked to the Iran war continue to feed into euro-area prices. European equities advanced on Tuesday, with the Euro Stoxx 50 gaining 1.2%. Germany’s DAX rose 0.5% and France’s CAC 40 added 0.8%, while the Swiss Market Index was little changed.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Broadcom, Inditex and Medtronic.

Economic data in focus: Services and Composite Purchasing Managers’ Indices from several major economies, including Italy (09:45), France (09:50), Germany (09:55), the euro area (10:00), the UK (10:30) and the US (15:45), as well as the US ISM Services PMI (16:00); US ADP National Employment Report (14:15), US Fed Beige Book (20:00).

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Editor: Alessandro Fezzi
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