Asian shares mixed as surging oil prices fan inflation fears

By ELAINE KURTENBACH
AP Business Writer

BANGKOK (AP) — Shares were mixed in Asia on Tuesday as investors watched for the latest moves by central banks, while oil prices steadied after shooting higher the day before following an announcement that major exporters plan to cut production.

Benchmarks rose in Tokyo, Shanghai and Seoul but fell in Hong Kong and Sydney.

Australia’s central bank kept its key interest rate unchanged at 3.60%

“The Board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook,” the Reserve Bank of Australia said in a statement, citing the usual lag between interest rate changes and their impacts.

The S&P/ASX 200 in Sydney slipped 0.1% to 7,217.60. Shares fell in Bangkok. Markets were closed in India and Taiwan.

Regional central banks have been varying their strategies as inflation wanes in some places but remains stubbornly high in others. Vietnam’s central bank eased its benchmark rate on Monday to reflect a slowdown in the economy. Japan has kept its key interest rate at minus 0.1% and China has been easing rates to alleviate pressures on its vital property sector.

Elsewhere in Asia, Tokyo’s Nikkei 225 gained 0.3% to 28,270.26, while the Shanghai Composite index picked up 0.2% to 3,304.33. Hong Kong’s Hang Seng lost 0.6% to 20,278.03, weighed down by losses in technology shares.

On Monday, big gains for energy stocks helped offset losses for some big technology stocks on Wall Street.

The S&P 500 rose 0.4% to 4,124.51. The Dow Jones Industrial Average gained 1% to 33,601.15. The Nasdaq composite lost 0.3% to 12,189.45.

Exxon Mobil and other oil producers leaped after Saudi Arabia and other producers said they’ll cut production by 1.15 million barrels per day from May until the year’s end. Less oil pumped means higher prices, as long as demand stays steady.

Oil prices soared 6.3%. Higher prices for fuel revived fears about inflation and dented one of the hopes that has helped steady stocks recently, that sharp hikes to interest rates may soon end.

Exxon Mobil jumped 5.9%. Marathon Oil 9.9% and BP 4.3%.

A barrel of U.S. crude oil was 42 cents higher at $80.84 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $4.75 to settle at $80.42 on Monday.

Brent crude, the international standard, rose 45 cents to $85.38 in London. It gained $5.04 to $84.93 per barrel on Monday and is roughly back to where it was a month ago.

But prices are well below where they were in March 2022, when Brent topped $130 per barrel after Russia’s invasion of Ukraine raised worries about energy supplies.

Beyond raising gasoline prices and other costs for everyone, costlier oil could confound the expectation that slowing inflation might lead the Federal Reserve to ease its interest rate hikes.

Lower rates tend to act like steroids for financial markets. U.S. stocks have tended to return an average of 8% in the three months following the peak of the Fed’s federal funds rate, according to Goldman Sachs. That includes six instances going back to 1982.

Conversely, higher rates hurt all kinds of stocks but tend to hit high-growth companies the hardest. That puts extra pressure on Big Tech stocks that have an outsized effect on the S&P 500 and other indexes because of their immense size.

In the first quarter, hopes for easier interest rates meant Big Tech stocks were among the main reasons for a gain in the S&P 500. Strategists at Morgan Stanley led by Michael Wilson are skeptical they’ll continue to hold up better than others when the market is still under downward pressure, as they expect.

Amazon was one of the heaviest weights on the index Monday, slipping 0.9%.

Tesla fell 6.1% after it said over the weekend that deliveries in the first three months of the year fell short of analysts’ expectations, even though it still set a record.

In other trading Tuesday, the U.S. dollar rose to 132.77 Japanese yen from 132.44 yen late Monday. The euro slipped to $1.0891 from $1.0905.

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AP Business Writer Stan Choe contributed.