Asian shares skid as oil tops $111 a barrel and Wall Street slumps

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BANGKOK (AP) — Shares retreated Thursday in Asia after stocks on Wall Street slumped as oil prices spiked at more than $110 a barrel.

U.S. stocks also sagged due to a report that said inflation was primed to worsen even before the war with Iran sent oil and gas prices spiking. That, and comments from the head of the Federal Reserve, led investors to expect there’s less chance of getting the lower interest rates that they love.

In turn, that sent Treasury yields higher, lending still more strength to the U.S. dollar, which has gained against other major currencies since the war began.

Oil prices have soared because the war has disrupted the Persian Gulf’s energy industry. Iran’s state television said Wednesday that the Islamic Republic would be attacking oil and gas infrastructure in Qatar, Saudi Arabia and the United Arab Emirates after an attack on facilities associated with its offshore South Pars natural gas field.

If the disruptions keep oil and gas prices high for long, they could create a debilitating wave of inflation for the global economy.

Brent crude, the international standard, was trading at $111.51 a barrel early Thursday, up 3.9% from a day earlier. U.S. benchmark crude oil gained 0.5% to $95.97 a barrel.

The Henry Hub future contract, the benchmark for U.S. natural gas, gained 4.6%.

In Asian share trading, Tokyo’s Nikkei 225 fell 2.5% to 53,875.94 as the Bank of Japan opted to keep its benchmark interest rate on hold at 0.75%.

It cited the war with Iran as one factor.

In its monetary policy statement it said that “in the wake of increased tension in the Middle East, global financial and capital markets have been volatile and crude oil prices have risen significantly; future developments warrant attention.”

Higher oil prices are a heavy burden for Japan, which depends on imports of most raw materials for industries that rely heavily on oil and its derivatives.

The Kospi in South Korea lost 1.3% to 5,845.62.

In Hong Kong, the Hang Seng slipped 0.2% to 25,725.77, while the Shanghai Composite index shed 0.9% to 4,027.73.

Australia's S&P/ASX 200 lost 8,504.20 and Taiwan's Taiex fell 1.2%.

“The combination of higher oil, rising U.S. yields, and a stronger dollar is acting as a macro wrecking ball across Asian assets and currencies,” Stephen Innes of SPI Asset Management said in a commentary.

On Wednesday, the S&P 500 fell 1.4% to 6,624.70, flipping to a loss for the week so far. The Dow Jones Industrial Average dropped 1.6% to 46,225.15, and the Nasdaq composite slid 1.5% to 22,152.42.

The losses deepened after the Fed decided to keep its main interest rate steady, instead of resuming cuts meant to give the job market and economy a boost.

“We just don’t know,” Fed chair Jerome Powell said about what will happen with oil prices, along with how long President Donald Trump’s tariffs will take to work their way fully through the system.

A report released Wednesday morning showed inflation pressures were already building before the war began. It said inflation at the U.S. wholesale level unexpectedly accelerated last month to 3.4%.

In other dealings early Thursday, The U.S. dollar fell to 159.70 Japanese yen from 159.88 yen. The euro rose to $1.1478 from $1.1453.

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AP Business writers Stan Choe and Matt Ott contributed.