Asia shares skid, yields rise as Gulf war escalates

SYDNEY, March 24 ------ Share markets slid in Asia while US bond yields hit eight-month peaks as the United States and Iran traded escalating threats and Israel planned for "weeks" more fighting, sending oil prices on another roller-coaster ride. Japan's Nikkei slid 3.9 per cent, bringing losses for March so far to over 13 per cent. South Korea's market shed 4.5 per cent, making a 12 per cent drop for the month. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.2 per cent.

Oil prices were again choppy with early gains quickly fizzling out, leaving Brent down 0.2 per cent at US$111.90 a barrel, but still up 55 per cent on the month so far. US crude was near flat at US$98.35. "The war could still go on for many weeks yet and see oil prices rise to US$150 a barrel," said Shane Oliver, head of investment strategy at fund manager AMP. "And the steady destruction of energy infrastructure means it will take longer to get supply back to normal." "It's also worth noting that past oil shocks unfolded over many months in terms of the rise in oil prices as the full impact became clearer – it was over about 4 months in 1973 and a year in 1979."

Analysts at HSBC noted Singapore jet fuel was up 175 per cent this year to a multi-decade high, while Asian liquefied natural gas had climbed 130 per cent. Bunker fuel used in shipping had blown out, raising the cost of transporting goods, while surging fertilizer prices will make food more expensive.

Source: channelnewsasia.com