Key Takeaways
- US military forces conducted strikes on an Iranian site in Bandar Abbas following a confrontation between the Revolutionary Guard and a US oil tanker in the Strait of Hormuz.
- Federal Reserve official Austan Goolsbee warned that energy inflation has been more persistent than anticipated, creating a "stagflation-type shock" for Asian economies.
- Nvidia (NVDA) H200 GPU prices are reportedly dropping sharply as long-standing AI chip supply constraints finally begin to ease.
- The Bank of Korea (BOK) saw a split decision in its latest policy meeting, with two board members dissenting and calling for rates to reach 3.25% within six months.
- Gold prices fell nearly 1% to trade at $4,412.25 per ounce, while the Canadian Dollar hit its lowest level since mid-April due to escalating Middle East risks.
Geopolitical Tensions Flare in the Strait of Hormuz
Geopolitical risks surged on Thursday after US forces attacked a military site in Bandar Abbas, Iran. According to the Tasnim Iranian Agency, the strike was a direct response to the Revolutionary Guard confronting a US oil tanker attempting to transit the Strait of Hormuz. While Iranian sources reported no casualties from the strike, the US Treasury moved quickly to sanction the “Strait of Hormuz Authority,” further targeting Iran’s shipping and energy networks.
The escalation has sent ripples through currency markets, with the Canadian Dollar struggling near the mid-1.3800s against the USD, its lowest level since April 13. Investors are increasingly pricing in a "war premium" as the threat to global energy transit routes intensifies.
Fed’s Goolsbee Warns of Persistent Inflation
Chicago Fed President Austan Goolsbee told CNBC that energy inflation has shown greater persistence than the central bank originally expected. Goolsbee noted that the current economic climate in Asia resembles a traditional stagflation-type shock, where slowing growth meets rising costs.
These comments come as global markets grapple with volatile energy prices exacerbated by the conflict in the Middle East. Goolsbee’s hawkish tone suggests that the path to lower interest rates may be more complicated than market participants had hoped.
Central Bank Divergence in Asia
The Bank of Korea (BOK) maintained a cautious stance on Thursday, though internal divisions are becoming apparent. Board members Chang Yong-sung and Ryoo Sang-dai dissented during the monetary policy vote, with some members projecting a move toward 3.25% in the near term. The BOK emphasized that it will continue to monitor inflation pressures and sharp currency market fluctuations before making further moves.
In Japan, Finance Minister Katayama reiterated that while the Bank of Japan (BOJ) must work in close coordination with the government, its monetary policy independence remains a priority. Katayama expressed support for policies that sustainably achieve a 2% inflation target alongside improving wage conditions. Following these remarks, the 10-year Japanese government bond yield slipped slightly to 2.685%.
Tech and Commodity Market Shifts
In the technology sector, Nvidia (NVDA) is seeing a significant shift in the secondary market as H200 GPU prices reportedly drop sharply. This price correction is attributed to the easing of AI chip supply constraints, which had previously kept prices at record highs. Meanwhile, Alibaba Group (BABA) shares in Hong Kong dropped 3% during Thursday's session, reflecting broader cautious sentiment in Chinese equities.
Commodities also faced pressure, with spot gold slipping nearly 1% to $4,412.25 per ounce. In economic data, Australia reported a mixed bag: Private Capital Expenditure for Q1 surged by 6.5%, far exceeding estimates of 1.0%, but Household Spending for April disappointed with a -1.1% contraction, indicating that high interest rates are weighing heavily on domestic consumers.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.