Main oil contract, Brent North Sea, surged toward $100 a barrel today as Tehran-backed Houthi rebels targeted Red Sea shipping, raising fears that the Middle East war is widening.
Most Asian stock markets were buoyed by a much-needed bounce for regional tech firms as investor appetite for artificial intelligence (AI) seesaws, reports AFP.
European markets were weaker, with London, Paris and Frankfurt all falling in midday trading.
The dollar firmed against its main rivals.
International oil benchmark Brent soared as much as five per cent to above $98 a barrel after Houthi rebels claimed to have struck two Saudi oil tankers in the Red Sea.
Iran vowed to keep striking the region so long as it remains under attack by US strikes.
“Investors are in a wary mood… as fresh jitters worry about the ongoing energy crunch hit sentiment,” said Susannah Streeter, chief investment strategist at Wealth Club.
“With both the Strait of Hormuz and the Red Sea now under increasing pressure, markets are bracing for the possibility that the conflict could disrupt key energy routes and keep oil prices elevated,” she added.
The prospect of higher oil prices also raises the prospect of higher inflation and interest-rate hikes, adding to weak sentiment, analysts said.
London’s FTSE 100 index was dragged into the red by a nine-percent drop in Centrica shares as the owner of British Gas laid out plans to cut 1,300 jobs alongside a mixed earnings update.
Paris shed one per cent, weighed down by a 15-per-cent drop in semiconductor group STMicroelectronics as its sales forecasts fell short of expectations.
French oil and gas giant TotalEnergies jumped three per cent after reporting that net profit doubled in the second quarter as the war pushed up energy prices.
Asian traders bought back into beaten-down tech stocks, with Seoul up more than four per cent, helped by rallies in chip giants SK Hynix and Samsung, while Tokyo was boosted by Advantest and SoftBank.
Hong Kong and Shanghai also rose.
Investors’ appetite for all things AI has been tested in recent months by concern about elevated valuations and as they question when the trillions pumped into the sector will see returns.
An earnings report from Google-parent Alphabet yesterday raised fresh concerns as it said it would likely spend as much as $205 billion on AI this year, far more than expected.
Next week’s results from Microsoft, Meta and Amazon will be pored over for their capital spending plans.
Eyes are on Tokyo after the yen hit a fresh four-decade low against the dollar amid concerns over the gap between the Bank of Japan’s low interest rates and those in the United States and other big economies.
Rising oil prices and concerns over Japan’s economy have added to pressure on the currency.
Key Figures Around 1100 GMT
Brent North Sea Crude: UP 4.8 percent at $98.60 per barrel
West Texas Intermediate: UP 4.3 percent at $90.56 a barrel
London – FTSE 100: DOWN 0.2 percent at 10,699.82 points
Paris – CAC 40: DOWN 1.1 percent at 8,342.39
Frankfurt – DAX: DOWN 0.6 percent at 24,995.03
Tokyo – Nikkei 225: UP 0.5 percent at 66,422.60 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 25,210.81 (close)
Shanghai – Composite: UP 0.3 percent at 3,876.78 (close)
New York – Dow: FLAT at 52,218.58 (close)
Euro/dollar: DOWN at $1.1405 from $1.1411 yesterday
Pound/dollar: DOWN at $1.3365 from $1.3372
Euro/pound: UP at 85.35 pence from 85.33 pence
Dollar/yen: UP at 163.38 yen from 163.15
