Asian shares fall in thin holiday trading after tech rally on Wall Street

Investor sentiment weakened after planned US-Iran talks were postponed, raising fresh questions about the pace of progress towards a lasting agreement and the reopening of the Strait of Hormuz

Shares retreated Friday in Asia, with markets in Greater China closed for holidays.

US futures declined as optimism over the US-Iran deal to end their war was dimmed by the postponement of high-stakes talks on reopening negotiations over Iran's nuclear program and getting oil moving through the Strait of Hormuz.

US markets will be closed Friday for Juneteenth.

Investor sentiment has also been hit by expectations that central banks including the Federal Reserve will raise interest rates to try to curb inflation.

Tokyo's Nikkei 225 wavered between gains and losses and was little changed at 71,082.81. The government reported that consumer prices excluding volatile fresh foods was unchanged, but analysts said it would likely pick up in coming months despite higher fuel costs.

 

Higher inflation was a factor driving the Bank of Japan to raise its benchmark interest rate earlier this week to a three-decade high of 1 per cent as it gradually adjusts its policies after years of near-zero or negative rates.

In South Korea, the Kospi lost 0.5 per cent to 9,019.22 and the S&P/ASX 200 in Australia declined 1.1 per cent to 8,818.40.

India's Sensex lost 1 per cent.

Markets in Hong Kong, Shanghai and Taiwan were closed for the Dragon Boat festival.

On Thursday, stocks rose on Wall Street, erasing most of their losses from a day earlier to notch weekly gains thanks to big advances for heavyweight technology companies. The decline on Wednesday was driven by anticipation that the Federal Reserve will likely raise interest rates this year in an effort to fight inflation.

The S&P 500 rose 1.1 per cent to 7,500.58. The Dow Jones Industrial Average added 0.1 per cent to 51,564.70 and the Nasdaq composite surged 1.9 per cent to 26,517.93.

Technology stocks had some of the biggest gains and the most influence on the broader market's rise. Intel surged 10.6 per cent after US President Donald Trump announced that the semiconductor giant will make chips for Apple in the US Other big semiconductor companies gained ground. Nvidia rose 3 per cent and Micron Technology jumped 8.7 per cent.

On the losing end, SpaceX fell for the second straight day since its big debut on the US stock market last week. The Elon Musk-led rocket maker and AI company was down 3.6 per cent following a 4.9 per cent loss Wednesday.

Oil prices wavered after the United States and Iran signed an agreement to end their war and reopen the Strait of Hormuz to oil tanker traffic. Brent crude, the international standard, spent most of the day lower before settling 0.4 per cent higher at $79.85 per barrel. US benchmark crude fell 0.2 per cent to $75.85 per barrel.

Early Friday, Brent crude was down 0.5 per cent at $79.34 per barrel. US benchmark crude lost 0.5 per cent to $75.37 per barrel.

Airlines had some of the bigger gains. American Airlines rose 3.7 per cent and United Airlines rose 2.1 per cent. Cruise line company Carnival jumped 3.2 per cent.

Energy companies lost ground. Exxon Mobil fell 2.1 per cent and Chevron fell 2.2 per cent.

Prices for crude oil are still above roughly $70 per barrel from before the war, but are well below the $100-plus price from a few weeks ago.

Higher oil prices have been weighing on markets throughout the US war with Iran. The current deal between the nations waives sanctions against Iran and allows it to sell its oil freely. It also opens up the Strait of Hormuz, where a fifth of the world's oil supply is shipped.

Rising energy costs have been putting more pressure on already hot inflation. The average price of gasoline in the US has dipped below $4 a gallon, but is still 25 per cent higher than a year ago. Prices have been rising for a wide range of goods because of higher shipping costs.

The Federal Reserve kept is key interest rate unchanged this week but hotter inflation means it will likely raise rates by the end of the year. Lower interest rates make borrowing easier for businesses and households, spurring growth, but they also tend to stoke inflation.

In other dealings early Friday, the US dollar rose to 161.39 Japanese yen from 161.38 yen. The euro slipped to $1.1441 from $1.1458.