Asian Markets Slip on Oil, Bond Yield Worries; Cautious Start Seen For Dalal Street

Mumbai, May 15:Asian markets traded lower on Friday after a sharp rise in U.S. Treasury yields and persistent worries over elevated crude oil prices dampened investor sentiment, pointing to a cautious start for Indian equities at the open. Safe-haven demand strengthened while investors remained focused on tensions surrounding the Strait of Hormuz, a key global oil transit route. 

Asia Declines

Japan’s Nikkei, South Korea’s Kospi and Hong Kong equities declined, while MSCI’s broadest index of Asia-Pacific shares outside Japan also slipped as investors assessed the impact of rising energy prices on inflation and global growth. Japanese wholesale inflation accelerated to a three-year high, reinforcing expectations of another Bank of Japan rate hike and adding to concerns over tighter global liquidity conditions. 

US Futures Edge Down

Wall Street, however, ended overnight trade on a firmer note, with technology shares once again driving gains, with chipmaker Nvidia rallying on optimism surrounding approvals to sell advanced AI chips to China, boosting sentiment across the semiconductor space. The S&P 500 rose 0.77% as investors continued to back artificial intelligence-linked stocks despite geopolitical uncertainty. To be sure, the S&P 500 and the Nasdaq set their latest in a series of record closing highs. However, futures linked to the S&P 500 and Nasdaq were seen edging down.

Europe Rises

European shares also advanced on Thursday, supported by gains in technology counters and hopes that the global AI spending cycle would remain intact. The pan-European STOXX 600 index rose as investors balanced optimism around corporate earnings against concerns stemming from the Middle East conflict and rising energy costs. 

Oil Boils

Crude oil prices remained elevated on Friday amid fears of further shipping disruptions near the Strait of Hormuz after reports of vessel seizures and attacks in the region. Brent crude traded above $106 per barrel, while WTI crude hovered above $101, keeping inflation worries alive for oil-importing economies such as India. 

The spike in oil prices has become a key concern for global investors as higher energy costs threaten to slow economic growth and complicate central bank policy decisions. Roughly one-fifth of global oil and LNG supplies move through the Strait of Hormuz, making any escalation in the region highly sensitive for financial markets. 

For Indian markets, the mixed global setup suggests a cautious opening. While strong cues from U.S. technology stocks could lend support to IT shares, elevated crude prices and rising bond yields may weigh on rate-sensitive sectors and broader market sentiment. The rupee could also remain under pressure amid higher oil import costs and a stronger dollar environment.

Source:

• Exchanges