Oil jumps on Mideast missiles, AI bulls carry stocks
Oil prices rose for a third straight day on Wednesday and the dollar was on the verge of rising above 160 yen as new hostilities flared in the Gulf after US-Iran peace talks stalled.
US crude oil futures rose nearly 2.0 per cent to US$95.40 ($A133.02) per barrel. The dollar reached 160 yen, then paused as traders became wary of potential Japanese intervention at that level.
S&P 500 futures fall, but AI bull run continues in Asia; Stock indexes climbed to record highs in Taiwan and Japan. South Korean markets were closed.
U.S. Central Command said Iran fired missiles at Kuwait and Bahrain, which were either intercepted or failed, prompting U.S. forces to retaliate against Iran’s Qeshm Island in the Strait of Hormuz.
Iran’s Revolutionary Guard announced that the US Fifth Fleet headquarters was attacked. Iran and the United States announced last week that they had reached an interim agreement to stop the war, but the two sides have not yet signed any agreement.
“Last week… the tide was towards some sort of MOU and markets had high confidence that it was coming,” said Chris Weston, head of research at broker Pepperstone in Melbourne.
“Things look more precarious right now. It shows people are coming back to the negotiating table with fewer opportunities to make that happen, and I think we’re seeing some of those bets resolved.”
Cryptocurrencies were in decline, with Bitcoin falling nearly 10 per cent over three sessions, hitting a two-month low at US$66,123 ($A92,201) on Wednesday.
Still, the AI theme seems impervious to war concerns, and Wall Street stock indexes posted small gains overnight led by AI.
Shares of Marvell Technology rose 32.5 percent to a record high after Nvidia boss Jensen Huang called the chipmaker the next trillion-dollar company during Computex week in Taipei.
SpaceX plans to raise US$75 billion ($105 billion) in a blockbuster IPO next week by selling 555.6 million shares with a target price of US$135 ($188) per share, according to a source familiar with the matter.
Bonds rebounded throughout Tuesday and remained steady early Wednesday, with the 10-year U.S. Treasury yield at 4.46 percent.
Overnight data showed U.S. job openings rose by the most in five years in April; This points to a resilient job market and provides little evidence that the economy needs lower rates.
US ISM services are due out later Wednesday, ahead of Friday’s labor market data.
“In our view, a recovery of momentum in the US economy in early 2026 could see the US jobs report exceed pessimistic consensus forecasts,” said Peter Dragicevich, Asia-Pacific currency strategist at payments firm Corpay.
“If it happens, we think this could support the view that the US Fed could raise interest rates in the future, which could lead to a strengthening of the USD.”
Markets, which expected an interest rate cut before the Iran war, priced in a US interest rate increase of approximately 18 basis points this year.
A rise next week in Europe is almost fully priced in after data showed inflation accelerating further last month, while traders see about a 75 percent chance of a June increase in Japan.
Foreign exchange markets were generally stable; The euro was at 159.86 against US$1.1627 (US$A1.6213) and the dollar was at 159.86 against 160 yen.
Data showed the Australian economy slowed in the March quarter; The boom in data centers boosted business investment while also lowering imports, but the currency remained steady at US$0.7177 ($A1.0008).
