Oil jumps as US, UK strike Houthis in Yemen, shares subdued
By Stella Qiu
SYDNEY (Reuters) -Asian shares were subdued on Friday as the escalating conflict in the Red Sea region sent oil prices surging, while slightly higher-than-expected U.S. inflation data did not dent investors' views on early and aggressive rate cuts in the U.S. and Europe.
The rally in rates may have been helped by dovish comments from European Central Bank (ECB) President Christine Lagarde who said rate cuts would occur if the central bank has certainty that inflation had fallen to the 2% level.
European markets are set to open higher, with EUROSTOXX 50 futures jumping 0.7% and FTSE futures up 0.4%. U.S. stock futures were, however, slightly lower.
Oil climbed after the United States and Britain said they launched strikes from the air and sea against Houthi military targets in Yemen in response to the group's attacks on ships in the Red Sea, a dramatic regional widening of the Israel-Hamas war in Gaza.
Brent futures jumped 2.0% to $79.00 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.1% to $73.55.
«I think at this stage it's too early to tell what kind of impact it'll have. Markets are taking a wait-and-see approach for the time being, hence we're not seeing too much of a reaction,» said Khoon Goh, head of Asia research at ANZ in Singapore.
«If we see a massive escalation of the situation… then the traditional flight-to-safety will see U.S. Treasuries, safe-haven currencies like yen and Swiss franc benefit.»
Still, the intensifying conflict has kept investors cautious. MSCI's broadest index of Asia-Pacific shares outside Japan inched 0.1% higher, but was still headed for a weekly drop of 0.7%.
Japan's Nikkei extended its impressive gains so far this year, jumping 1.5% to another 34-year
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