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Asia stocks steady after Wall Street gains on surge in oil prices

by Jonathan Adams
Asia stocks

Asia stocks were steady after Wall Street gained on a surge in oil prices

Asian stocks held their ground on Friday after Wall Street gained on a surge in oil prices as attacks on tankers in the Gulf of Oman stoked U.S.-Iran tensions and raised concerns over supply flows through one of the world’s main sea lanes.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed.

Australian stocks edged up 0.05% while Japan’s Nikkei dipped 0.1%.

U.S. stocks rose on Thursday after two days of declines, with energy shares rebounding on the back of crude oil’s surge.

Wall Street shares have had a strong run in June on hopes the Federal Reserve will ease monetary policy soon to counter a slowing global economy due to the escalating trade war with China. The S&P 500 index is up about 5% so far for the month.

But equity market gains were limited ahead of the Fed’s June 18-19 meeting, which will give investors an opportunity to see if the Fed’s monetary policy stance is in sync with market expectations for a near-term rate cut.

There is a large degree of uncertainty going into next week’s FOMC (Federal Reserve Open Committee) meeting as market reaction will differ significantly depending on whether the Fed hints toward easing policy, said Shusuke Yamada, chief Japan FX and equity strategist at Bank Of America Merrill Lynch.

Yamada said a wait-and-see mood is likely to begin prevailing in the markets ahead of the FOMC.

In commodities, Brent crude futures slipped 0.29% to $61.13 per barrel after rallying 2.3% the previous day.

Brent surged on Thursday after two oil tankers were attacked in the Gulf of Oman, one Norwegian-owned and the other Japanese-owned.

U.S. crude slipped 0.86% to $51.83 per barrel after rising more than 2 percent on Thursday.

The dollar index against a basket of six major currencies was little changed at 96.998 after ending the previous day nearly flat, with caution ahead of the next week’s Fed meeting keeping the greenback in a tight range.

The euro was steady at $1.1281 while the greenback dipped 0.1% to 108.295 yen.

The Australian dollar was a touch lower at $0.6914, still shaky after the previous day’s losses. The Aussie had slipped to a two-week trough of $0.6901 on Thursday after soft domestic labour data added to expectations of a rate cut by the Reserve Bank of Australia.

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