Global shares hovering in red zone amid heightened volatility

Bangkok: Global oil and natural gas prices soared Thursday after Iran attacked a key natural gas facility in Qatar that can supply one-fifth of the worlds gas as well as two oil refineries in Kuwait. As oil and gas prices spiked, world shares retreated and US futures edged 0.2 per cent lower.

Germany’s DAX lost 2.1 per cent to 23,015.40 and the CAC 40 in Paris fell 1.5 per cent to 7,848.88. Britain’s FTSE 100 shed 1.7 per cent to 10,134.02.

In Asian share trading, Tokyo’s Nikkei 225 fell 3.4 per cent to 53,372.53 as the Bank of Japan opted to keep its benchmark interest rate on hold at 0.75 per cent, citing the war with Iran as one factor.

In its monetary policy statement the BOJ said that “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.”

Higher oil prices are a heavy burden for Japan, which like South Korea and Taiwan depends on imports of most raw materials for industries that rely heavily on oil and its derivatives.

The Kospi in Seoul lost 2.7 per cent to 5,763.22. In Hong Kong, the Hang Seng slipped 2 per cent to 25,500.58, while the Shanghai Composite index shed 1.4 per cent to 4,006.55. Australia’s S&P/ASX 200 lost 1.7 per cent to 8,497.80 and Taiwan’s Taiex fell 1.9 per cent.

“The combination of higher oil, rising US yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management said in a commentary.

On Wednesday, the S&P 500 fell 1.4 per cent, flipping to a loss for the week so far.