Asia report: Markets mixed as oil prices surge on Baghdad attack
Markets in Asia finished in a mixed state on Friday, as investors reacted to news that a top Iranian military commander was killed in a US airstrike late in the region’s day.
In Japan, markets remained closed for an ongoing public holiday, as the yen strengthened 0.41% against the dollar to last trade at JPY 108.12.
On the mainland, the Shanghai Composite was down 0.05% at 3,083.79, and the smaller, technology-focussed Shenzhen Composite rose 0.27% to 1,760.85.
South Korea’s Kospi was 0.06% firmer at 2,176.46, while the Hang Seng Index in Hong Kong slid 0.32% to close at 28,451.50.
The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics rising 0.54% while chipmaker SK Hynix lost 0.21%.
Looking at the energy stocks in Hong Kong, CNOOC was up 1.85% and PetroChina added 3.05%, after the US confirmed its strike on Baghdad Airport.
For much of the Asian day, investors were upbeat on comments from the White House that negotiations for the second phase trade agreement between the United States and China would begin imminently.
Donald Trump had confirmed earlier in the week that he would be welcoming a Chinese delegation to sign the much-anticipated first phase deal in Washington on 15 January.
He also said that he would be travelling to Beijing in due course, to begin talks around a phase two trade agreement between the two economic superpowers.
Focus late in the session turned to the Middle East, after the Pentagon confirmed that, at the behest of President Donald Trump, US forces had staged an airstrike on Baghdad Airport in Iraq.
The target - high-profile Iranian military commander General Qassim Soleimani, who is the head of the country’s elite Quds Force - was killed in the strike, along with Abu Mahdi al-Muhandis, who is the deputy commander of the Iran-supported Popular Mobilization Forces militia.
Iran reacted by describing the US strike as an act of war, promising a retaliatory strike in response.
“Though Suleimani may be unknown by many in the West, some political analysts have likened him to a US vice president in terms of profile, while he has previously been described as the ‘single most powerful operative in the Middle East’,” said Spreadex analyst Connor Campbell.
“Important to bear in mind when considering the kind of response that could be expected from Iran - a nation, remember, that has major ties to Russia and China.”
The development led to an immediate and sharp rise in oil prices, with Brent crude last up 3.65% at $68.76 per barrel, and West Texas Intermediate 3.55% firmer at $63.43.
In Australia, the S&P/ASX 200 was 0.64% higher at 6,733.50, with all of Sydney’s subindices ending the session in the green.
Oil plays were higher in the sunburnt country in the wake of the Middle East escalations, with Beach Energy up 3.17% and Santos ahead 2.31%.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 made its 2020 debut by rising 0.88% to 11,593.14.
Among the leading risers in Wellington was airport operator AIAL, which surged 4.91% by end-of-play.
Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.81% at AUD 1.4418, and the Kiwi retreating 0.8% to NZD 1.5048.