Asia-Pacific stocks softened in Wednesday trading (October 7) while oil prices climbed. The MSCI Asia-Pacific index excluding Japan fell 0.3%, even though Wall Street had just set fresh records on Tuesday. Investors are weighing a military escalation between Saudi Arabia and Yemen's Houthis, alongside a storm bearing down on oil-producing regions in the Gulf of Mexico.
Regional benchmarks declined in early trading: Japan's Nikkei 225 lost about 0.86%, the Topix fell 0.6%, South Korea's KOSPI dropped 0.8%, and Hong Kong's Hang Seng slid 0.63% in the morning session and 0.7% later in the day, dragged by a 4% plunge in the Hang Seng biotech index. Australia's ASX 200 was roughly flat; mainland Chinese markets were closed for the holiday. The MSCI Asia-Pacific ex-Japan index is still up 1.5% so far this month.
Crude was the clearest mover. In Asian trading, U.S. WTI rose 1.05% to $90.38 a barrel while international benchmark Brent gained 1.06% to $101.65. Two forces are driving prices: a storm heading for North American oil-producing areas in the Gulf of Mexico, and rising Saudi-Houthi tensions. Vitol CEO Russell Hardy said Tuesday that roughly 12 million barrels per day of crude and 2 million bpd of refined products have left the Middle East on tankers over the past 7 to 10 days.
The escalation unfolded over the weekend. Houthi spokesman Yahya Saree claimed in a statement that the group had launched two rounds of "precise strikes" with ballistic missiles and drones against Aramco facilities in Riyadh and the Khurais region, starting fires — described as retaliation for about 50 Saudi-led coalition airstrikes in the previous 12 hours across Sanaa, Jawf, Taiz, Amran, Hajjah and Sa'dah, with cumulative coalition strikes since the escalation reaching 1,460. None of these claims have been independently verified. Coalition spokesman Turki al-Maliki called the Houthi claims about striking Riyadh "misleading"; Aramco declined to comment.
On the morning of October 4, the Saudi-led coalition said it had carried out 97 "precise strikes" on the Tor al-Baha front and the Taiz axis in Yemen. Yemeni government spokesman Majed Abdullah al-Nazili claimed the strikes targeted at least 260 Houthi fighters and destroyed or damaged 44 military vehicles — again unverified. The backdrop is a large-scale military operation launched Sunday by the Saudi-backed Yemeni government, retaking control of the coast from the Bab el-Mandeb strait to Mocha.
Asia's caution contrasted with Tuesday's euphoria on Wall Street: the S&P 500 rose about 0.6%, the Nasdaq 0.45% and the Dow 0.5%, all setting closing records. Safe havens held firm too: spot gold stayed near $4,165.53 an ounce and the dollar index edged up 0.03% to 101.94. Investors are now awaiting the Federal Reserve's release of its September meeting minutes on Wednesday; bets on an October rate hike have fallen from about 50% a week ago to 19%.
(Compiled from reporting by Reuters, Sweden Herald, tradingnews.com, Newsmax, DevDiscourse and asiaPOST)