Asian Shares Retreat as Oil Talks Delay and Rate Hike Fears Weigh on Markets

BANGKOK (AP) — Asian shares retreated Friday in thin holiday trading, with several major markets in Greater China closed for the Dragon Boat Festival, as investor sentiment was dampened by the postponement of high-stakes talks on Iran’s nuclear program and renewed expectations of interest rate hikes by central banks.

U.S. futures declined after optimism over a recent U.S.-Iran agreement to end hostilities was tempered by delays in reopening negotiations that could have eased oil transportation through the vital Strait of Hormuz. The talks were seen as crucial for resuming oil flows and stabilizing energy markets.

In Tokyo, the Nikkei 225 fluctuated between small gains and losses, ending little changed at 71,082.81. Japan reported that core consumer prices were unchanged, but analysts expect inflation to pick up amid rising fuel costs. The Bank of Japan raised its benchmark rate to a three-decade high of 1% earlier this week, continuing its gradual policy normalization after years of near-zero rates.

South Korea’s Kospi fell 0.5% to 9,019.22, Australia’s S&P/ASX 200 dropped 1.1% to 8,818.40, and India’s Sensex lost 1%. Markets in Hong Kong, Shanghai, and Taiwan were closed for the holiday.

The retreat in Asia followed a tech-led rally on Wall Street on Thursday. The S&P 500 rose 1.1% to 7,500.58, the Dow Jones Industrial Average edged up 0.1% to 51,564.70, and the Nasdaq composite surged 1.9% to 26,517.93. Technology shares led gains, with Intel jumping 10.6% after President Donald Trump announced the company will manufacture chips for Apple in the U.S. Nvidia rose 3% and Micron Technology gained 8.7%.

Oil prices remained volatile as the market absorbed the implications of the U.S.-Iran deal. Brent crude ended Thursday 0.4% higher at $79.85 per barrel, while U.S. benchmark crude fell 0.2% to $75.85. Early Friday, Brent was down 0.5% at $79.34 and U.S. crude slipped 0.5% to $75.37. The average U.S. gasoline price has dipped below $4 per gallon but remains 25% higher than a year ago.

Investors also remained cautious about the Federal Reserve’s next moves. The Fed kept interest rates unchanged this week, but signals of persistent inflation have raised expectations of a rate hike by the end of the year. Meanwhile, SpaceX shares fell for a second straight day after its stock market debut, dropping 3.6% following a 4.9% loss on Wednesday.