Asia stocks edge higher, oil up amid Gulf confusion

Iran said on Aug 9 that a deal with Oman defining new shipping lanes in the Strait of Hormuz was in its final stages.

SYDNEY – Asian share markets tracked Wall Street higher on Aug 10 after a soft US jobs report pared the risk of a near-term rise in borrowing costs, though a lack of progress in Gulf peace talks saw oil prices creep higher.

Iran said on Aug 9 that a deal with Oman defining new shipping lanes in the Strait of Hormuz was in its final stages, but reiterated that the waterway would only reopen once the United States met other conditions.

Brent crude added 0.9 per cent to US$84.32 a barrel as shipping through the vital waterway remained at a trickle, while US crude rose 0.7 per cent to US$78.74 a barrel.

The latest revival in fuel costs raises the stakes for the US July consumer price report due on Aug 12, where analysts look for a rise of 0.1 per cent in the headline and 0.2 per cent for the core.

Any upside surprise could rekindle speculation of a hike from the Federal Reserve in September.

“Our forecast for core CPI of 0.22 per cent is probably not quite firm enough to prompt a hike from the Fed at the September meeting, though repeated prints closer to 0.3 per cent could do it,” said Michael Feroli, chief US economist at JPMorgan.

“One thing we are watching for is any rebound in core goods prices after a two-month stretch in which they fell.”

The futures market has scaled back the chance of a September move to around 44 per cent, from 67 per cent a week ago.

The pullback in rate risk helped Treasuries rally on Aug 7 and saw Wall Street close at record highs. Japan’s Nikkei followed that lead and rose 0.6 per cent on Aug 10, while South Korea added 0.5 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent.

For Europe, Eurostoxx 50 futures and DAX futures both dipped 0.1 per cent, while FTSE futures fell 0.4 per cent.