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Asian markets fall as US-Iran conflict lifts oil and bonds yields
The stock market in Asia slumped on Wednesday, as the global selloff triggered by the bond markets spilled into?the region after renewed U.S. attacks on Iran drove oil prices higher. MSCI's broadest Asia-Pacific share index outside Japan fell 1.5%, as South Korea's KOSPI plunged more than 3% and the Nikkei was down 2.6%. S&P 500 futures fell 0.1%. Brent crude futures continued to rise as trading resumed on the Asian continent, rising by 1.3% to $95.91 per barrel. This was after U.S. airstrikes against Iran, which had pushed prices up to a 5-week high, on Tuesday. Westpac analysts noted that "the threat of further disruptions in the Strait of Hormuz" has prompted renewed concern over inflation. This has led to a drop in stock prices on most major markets and a crash in bond markets around the world. The yield on U.S. Treasury 10-year bonds hit its highest intraday level of 4.8122% - its highest in almost three years - while the yield on 5-year Japanese Government Bonds rose to its highest ever level of 2.295%. DBS analysts noted that "September started on a'shaky note, as government bonds from developed markets continued to fall." They added, "Prepare for a volatile next month as high yields cause anxiety across asset classes." If the bond crisis is not stopped, policymakers will probably need to take more aggressive measures in order to limit yields. The kiwi was down 0.6% to $0.5855, after the Reserve Bank of New Zealand raised interest rates by 25 basis point?to 2.5%. Markets had expected this, but the dovish tone of the central bank's announcement weighed on it. The U.S. Dollar Index, which measures greenback strength against a basket six currencies, was up 0.1% to 99.79. This is its highest level since August 17. The S&P 500 fell overnight by?0.7%, while the Nasdaq Composite dropped 1%. This was due to a rise in government bond yields that weighed heavily on the equities. Data from the Institute for Supply Management, released on Tuesday, showed that?U.S. Manufacturing activity in August moderated amid a decline in new orders but remained in an expansionary territory. The Federal Reserve will likely raise interest rates in the next two weeks at its meeting, but a rise is not guaranteed. Fed funds futures are pricing an implied probability of 67% that benchmark borrowing costs will increase by 25 basis points at the U.S. Central Bank's two-day conference ending on September 16. This is compared to 39.6% a week earlier, according to CME Group’s FedWatch tool. Gold fell 0.8% to $4,295.70 per ounce. Bitcoin dropped 0.6% to $76,979.55 while ether dropped 0.9% at $2,397.78.
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BHP's Chief Commercial Officer to Step Down in January, Internal Memo shows
BHP's commercial officer Rag Udd will step down by the end of January in order to pursue a career outside the company. This was revealed in a memo sent out on Tuesday. The miner is now left with a difficult role -- negotiating iron-ore deals with China. Some analysts and investors had considered Udd as a candidate for the "top job" at BHP. Brandon Craig, who started in July, was given the position. According to the memo, Udd will have been working at BHP in Singapore for 30 years by the time he leaves. Udd?was responsible for BHP's negotiation with China -Mineral Resources Group. (CMRG), at a time when the state buyer increased pressure on BHP, and other iron ore miner to get better terms from its steel makers in annual pricing negotiations. This pressure led to a number bans on steel mills buying their products in the last quarter of last year, until an agreement was reached in April. Iron ore producers expect these negotiations to become more difficult, and choosing 'the best' leader to manage this key relationship will be a priority for Craig. Udd previously led BHP's Americas Division from 2020 to 2024. He was responsible for the development of Jansen Potash Project in Canada, which is expected to start production by mid-next year. He also oversaw major investment?across BHP Chilean copper operations, including the Spence extension and Escondida - the world's biggest copper mine.
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US energy chief: Venezuelan oil production to double within a few years
Chris Wright, the U.S. Energy Secretary, said that after arriving in Venezuela on Tuesday that the 'deals' that oil companies from the U.S. The oil companies from the United States and other countries will sign deals in Caracas tomorrow that will result in a more-than-doubling of crude oil production over the next few decades. Wright is on a one day trip to Venezuela, the founding OPEC member. This is his second visit since U.S. troops seized Venezuela's Nicolas Maduro as leader in January. Venezuelan oil production peaked at over 3?million barrels a day in the late 1990s, but then?plummeted due to a lack investment, poor management and U.S. sanction. It has risen slightly since Maduro's capture, but it is still around 1.1 to 1.2 million barrels per day. Wright stated that U.S. gas prices will fall in the upcoming weeks as a result of steps taken by the Trump administration to relax regulations on refiners. Wright told reporters that the biggest problem with gasoline and diesel prices right now is the refining capacity.
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US military claims it has completed the latest wave of attacks on Iran
The?U.S. The?U.S. military announced late on Tuesday that it had completed its latest round of'strikes against Iran. It said it had'struck Islamic Revolutionary Guard Corp?targets, as the Iran War escalated after a weekend firefight. U.S. Central Command reported that U.S. forces had struck IRGC target "including air defence sites, radar systems and maritime assets, mine-laying capabilities and communications sites", the U.S. Central Command stated on X. Axios reported, citing U.S. government officials, that the U.S. army?attacked 2 Iranian government tanks in Tuesday's attacks. Iran responded on Tuesday to a barrage of 'U.S. The exchange of strikes marked the most significant escalation since weeks in the conflict that has "driven up global oil prices". The strikes came after a weekend firefight, the first one since late July. And attacks on Monday against two tankers that were leaving the Strait of Hormuz - the waterway for global oil supply which Iran had 'effectively closed off to shipping. Tehran has retaliated against U.S. assets located in Jordan, Bahrain and Iraq. The Iranian Red Crescent reports that five people were killed at a wedding in Sirik, an area along the Strait of Hormuz. 50 others were injured. Mehr reported that a four-year-old was killed. IRNA, citing an official from the province, said there were 68 wounded. Iran responded to the U.S. and Israel's attack on Iran by striking Israel and Gulf states that host U.S. bases. U.S. and Israeli strikes on Iran, and Israeli attacks in Lebanon have caused thousands of deaths and millions of refugees. U.S. Energy secretary Chris Wright reported that 17 million barrels a day of crude oil passed through the Strait of Hormuz, the largest amount since the war reduced the flow. On Tuesday, President Donald Trump stated that he was "not trying" to force Iran at the bargaining table. When will the Iranian people rise up and fight? Trump posted a message on Twitter.
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Oil prices up nearly 1% after US and Iran trade new strikes
Early trade on Wednesday saw oil prices rise by nearly 1%, continuing the previous session's increase, as fears of supply disruption increased?after the U.S. & Iran exchanged strikes, dimming hope for a rapid easing?of tensions?in the Middle East. Brent crude futures rose 87 cents or 0.92% to $95.52 a barge by 0008 GMT. U.S. West Texas Intermediate futures rose 80 cents or 0.89% to $91.02. Both contracts rose more than $4 Tuesday. Brent's biggest gain since July 24, and WTI's biggest since July 23. The United States announced that it launched a series of airstrikes overnight against Iranian targets, prompting a response from Iran, in what was the most serious escalation in the conflict between the two nations in recent weeks. The U.S. Central Command posted a message on X referring to Iran’s Islamic Revolutionary Guard Corps. The IRGC stated that the U.S. attack?would further limit traffic through the 'Strait of Hormuz. This is a crucial waterway which carried approximately one-fifth of global oil consumption before the conflict, and which Iran effectively closed for commercial shipping. In response to American strikes, the Iranian state media reported a massive drone attack against a U.S. based in Bahrain. Jordanian military officials claimed that their air defenses had intercepted ten of the 13 ballistics missiles which entered its airspace. Meanwhile, two U.S. officials stated that no American casualties have been reported to date. Kuwait also said that its armed forces responded to hostile drone activity. The latest exchange came after the weekend's first flare-up of hostilities since July. It also followed the?attacks against two tankers leaving the Strait of Hormuz, which caused further disruptions in oil supplies, forcing traders to seek alternative crude shipments. Market sources cited data from the American Petroleum Institute to report that crude oil inventories in the U.S. fell by 2.6 million barrels during the week ending August 28. Distillate stocks (which include heating oil and diesel) also declined by 265,000.
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Asian markets fall as US-Iran conflict lifts oil and bonds yields
The stock market fell at the beginning of Wednesday's Asian trading session as the panic caused by the bond markets on global markets spread to the region. This was after the renewed U.S. attacks on Iran pushed up oil prices. MSCI's broadest index of Asia-Pacific stocks outside Japan fell 0.8% at the opening, as South Korea's KOSPI plunged 3% and Japan's Nikkei225 dropped 2.2%. S&P 500 futures are flat. Brent crude futures continued to rise as trading resumed on Wednesday in Asia. They rose 0.7% to $95.34 per barrel, after U.S. airstrikes against?Iran, on Tuesday, had pushed the oil price to a five week high. Westpac analysts reported that "the threat of further disruptions to the Strait of Hormuz" has sparked renewed inflation fears, causing a selloff of stocks in most major markets and a crash in global bond market. The yield on the U.S. Treasury bond of 10 years was up 0.4 basis points at 4.798%. Meanwhile, the U.S. Dollar Index, which measures greenback strength in relation to a basket six currencies, remained near its highest level of the last two weeks, at 99.67. Overnight, Wall Street saw the S&P 500 fall 0.7% while the Nasdaq Composite dropped?1% due to a rise in government bond yields. Data from the Institute for Supply Management, released on Tuesday, showed that U.S. Manufacturing activity moderated during August due to a?slowdown in new orders but remained in an expansionary zone. The Federal Reserve will likely raise interest rates in two weeks at its next meeting, according to traders. However, a rate hike isn't certain. Fed funds 'futures' are currently pricing a 67% implied probability that benchmark borrowing costs will increase by 25 basis points at the U.S. Central 'bank's 2-day meeting which ends on September 16, compared with a 39.6% likelihood a week earlier, according to CME Group's FedWatch. Gold was unchanged at $4,328.59 per ounce. Bitcoin fell 0.2% to $72,246.57, and ether dropped 0.3% to $2,412.60.
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Data shows that Venezuelan oil exports were almost the same at 1,17 million bpd during August.
Documents and vessel tracking data released on Tuesday show that Venezuela's oil exports were almost unchanged at 1.17 millions barrels per day in August. A larger flow into India and Europe compensated for a lower shipment to the U.S. Last month, the number of tankers lining to load increased and their average waiting time increased as the state-run PDVSA terminals were in poorer condition and crude quality issues led to longer delays. This was a roadblock to a U.S. strategy to boost the OPEC nation's 'oil exports' quickly. One document showed that a power blackout late in July, which affected all PDVSA's crude upgrading stations and blending station, also contributed to the loading delays of August. The data shows that global trading companies?including Vitol, Trafigura and others?managed to keep their export volumes at 597,000 barrels per day, as opposed to 604,000 in July. Meanwhile, the exports of Venezuelan oil by U.S. giant Chevron fell slightly, to 286,000 barrels per day, from 293,000 the previous month. Venezuelan oil exports to America averaged around 553,000 barrels per day (bpd), below the July record of 786,000 bpd. Exports to India increased by 66% compared to the previous month, to 297,000 barrels per day. Meanwhile, exports to Europe nearly tripled from?260,000 to?260,000. Last month, the country imported 166,000 bpd in fuel - mostly from the U.S. The data shows that the country imported more than twice as much naphtha in August to dilute its heavy crude production. Venezuela's oil exports will soon change after dozens of oil projects migrate to new contract terms. This allows new supply contracts to be made by PDVSA partners who can then commercialize their share of output independently. A recent announcement involved Caracas and Washington, as well as the United States. North American Blue Energy Partners, a producer in Venezuela, is also expected to increase the flow of Venezuelan crude oil to the United States.
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These power and cooling companies are also riding the data centre boom, which is worth trillions of dollars.
Nvidia may be synonymous with AI, but a group of lesser-known power and cooling equipment providers is also cashing in on the global data center construction boom as developers rush to avoid infrastructure bottlenecks. The energy-hungry data centers have created a surge of demand for equipment from transformers to advanced cooling systems. This has created winners throughout Asia's supply chains, though earlier stock price gains have moderated. McKinsey predicts that data centres will be worth $7 trillion by 2030. Nvidia said last week it expected AI spending to continue for many years. It is getting harder to build data centres quickly enough to meet the demand. According to Pivotale AI, hyperscalers want their facilities in six months. However, grid connection delays in emerging markets can be as long as eight years and as much as 24 months. Wing Kin Cheung is the CEO of digital service provider BodaData. He said, "Outside industry circles, people talk about (graphics processor units), but inside the circle people will most likely ask you about the lead times for generators and transformators." Transformers are used to convert grid electricity into a level suitable for cooling systems, power distribution units and servers. The AI Scrutiny Deepens The demand for transformers from leading suppliers, including South Korea's HD Hyundai Electric as well as China's Hainan Jinpan Smart Technology, is expected to increase in the first half 2026 due to AI infrastructure projects in North America. HD Hyundai Electric said recently that demand in Europe was increasing as U.S. Hyperscalers increased investments in markets such as Finland, Germany, and Britain. Middle East demand also remained strong. The order backlog increased by 23% from the previous six-month period to $8.5 billion. It predicted that data centres would account for 16%, up from 6,3% of new orders in its power business next year. In the first half of this year, Jinpan's new data centre orders more than quadrupled compared to a year ago, and its backlog almost tripled. Equipment makers also bet on technologies that improve efficiency and reduce environmental impacts. This is because AI chips are consuming more electricity. Bank of America, citing Nvidia’s roadmap, estimates that power consumption per AI rack will reach more than 1.5 megawatts at the end of 2030. This is nearly 100 times higher than a conventional rack. Solid-state transformers (SST) are a technology that is gaining more attention. They replace bulky copper and magnetic coils with semiconductors for the purpose of transforming and routing electricity. UBS believes SSTs can increase energy efficiency by 4%, and lower costs. The bank estimates that commercial adoption is still in its infancy, but they expect their penetration to reach 40% by 2030. They also predict that Chinese companies are likely to gain market share due to their technological expertise and lower costs. HD Hyundai Electric, Jinpan and Taiwan's Delta Electronics are all working to develop SSTs. Delta Chairman Ping Cheng stated in July that "it is fundamentally a gateway to energy, which requires an entirely different design and power architecture." "Adoption is going to take some time." COOLING RACE As operators struggle to control the heat generated by powerful AI chip, cooling systems are becoming a growing area. Matty Zhao is the Asia-Pacific director of?research in basic materials, oil, and gas at Bank of America. By 2030, liquid cooling is expected to account for 70% of all new AI data centres compared to air cooling. This represents a significant increase from the current 30%. McKinsey claims that liquid cooling can reduce energy use by over 27%. Developers also explore unconventional approaches such as floating facilities, undersea data centres, and servers in tunnels or caves. This opens up opportunities for a wider range of suppliers. HD Hyundai Electric stated that new opportunities for marine medium speed engines are opening up with the expansion of the data center self generation and floating data center markets. Delta, local competitors Asia Vital Components (Auras Technology) and Asia Vital Components (Auras Technology), as well as China's Shenzhen Envicool Technology are all benefiting from the strong demand for thermal management products. All three are part of Nvidia's ecosystem. Supply Chain Constraints Investors are questioning the high valuations of stocks amid increased competition, despite the surge in orders. Delta's shares have risen by more than 90% in the past year. HD Hyundai Electric, however, has been largely flat after a year of gains that exceeded 100%. China's Envicool and Jinpan have dropped by nearly 30% and 20 %, respectively, following gains of 118% and 244%. Delta's Cheng stated, "Even?if revenue increases I think gross margins will likely remain at this level." There are many factors in the market including new product platforms and deployment delays, as well as component shortages. These issues could become more serious by the second half this year. Zhao, a Bank of America spokesperson, said that investors need to be aware of possible risks. She said, "Not everyone wins." You have to cherry-pick the leaders that get the actual customers.
The FOREX Dollar holds its ground as Middle East hostilities raise oil prices
The dollar held steady on Wednesday, as renewed hostilities?in the Middle East drove oil prices higher and revived concerns about inflation.
Rising Treasury yields and growing expectations for a Federal Reserve rate hike have boosted the currency's appeal as a safe-haven, despite recent economic data coming in below predictions.
The?U.S. The?U.S. Early trade on Wednesday saw oil prices rise by nearly 1%, continuing the previous session’s gains. Brent futures were up 0.92% to $95.52 per barrel, and U.S. West Texas Intermediate crude was 0.89% higher at $91.02.
Kumiko Ishikawa is a senior FX Analyst at Sony Financial Group. She said that "continued vigilance" was needed in light of the current situation in the Middle East.
The dollar index (which measures the greenback in relation to a basket of currencies, including the yen, the euro and others) was 99.67.
The overnight release of the ISM August manufacturing index and July JOLTS jobs openings were both below market expectations, but following Fed Chair Kevin Warsh’s speech in Jackson Hole on last week, money markets are now expecting a Federal Reserve rate increase.
According to CME Group’s FedWatch tool, the markets now price in a 67% probability of a Fed hike in September, up from?40% just a week ago.
Ishikawa stated that if U.S. figures are low, the impact of the data could be negated by increased tensions in the Middle East.
Both the August jobs report and the consumer price index are due to be released before September 15, 16, when Fed meets. The median estimate of the economists polled predicts that this Friday's "jobs report" will show employers added 56,000 jobs in August.
Fed Governor Michael Barr stated on Tuesday that the U.S. Central Bank will have to raise interest rates if inflation doesn't cool down quickly.
The yield on the benchmark U.S. 10 year notes increased to 4.8% on Wednesday morning. In Japan, however, the yield for its benchmark 10-year note was at 3% after it reached a 30-year milestone Tuesday. Higher yields encourage investors to purchase safe-haven currencies such as the U.S. Dollar, and undermine the case for riskier investments like equities.
The kiwi was slightly lower at $0.5889?ahead of the Reserve Bank of New Zealand's policy decision, which is expected to be made later in the day. It is widely believed that the central bank will raise interest rates a quarter-point to 2.75%.
The Australian dollar was unchanged at $0.7143 against the greenback, while the British pound fell 0.04% to £1.3509.
Bitcoin fell 0.07% in value to $76,376.22. Ethereum fell 0.08% to $ 2,418.26.
YEN UNDER SUBSTANCE
The Japanese yen remained unchanged at 160.21 against the dollar, remaining above the psychologically significant 160-per-dollar mark despite widespread expectations that the Bank of Japan would raise rates in this month.
Treasury Department reports that U.S. Treasury secretary Scott Bessent expressed strong support for "decisive monetary measures" to combat the yen's weakness during a meeting with BOJ governor Kazuo Ueda.
Ueda said to reporters that he would like to discuss at the board meeting this month whether or not the economy was moving in line with their forecast and if inflation risks are increasing. Later on Wednesday, a BOJ board member who is hawkish will deliver a speech.
The rare joint 'intervention' by the U.S., Japan and other countries at the end of July brought the yen back to its 40-year-low of 163,99, but it has since lost around half the gains made from this joint action.
Tony Sycamore is a market analyst with IG. He said in a recent note that there was little chance of a second round of coordinated intervention until the Strait of Hormuz de-escalated and the price of oil began to drop.
(source: Reuters)