Asia-Pacific market update: Oil rises on Saudi-Houthi attacks and Gulf storm threat

Summary:

• Oil advanced on heightened Saudi-Houthi conflict and a storm moving toward US Gulf oil regions.
• Houthi allegations of attacks on Riyadh's main airport and other Saudi locations have not been verified by Saudi officials.
• Gold declined as the dollar and yields strengthened. The People's Bank of China increased its gold reserves for a 23rd consecutive month in September.
• The dollar strengthened against major currencies, with USD/JPY approaching 158.50 and EUR/USD falling below 1.1240.
• The Federal Open Market Committee's minutes are scheduled for release Wednesday at 2:00 pm ET (18:00 GMT), and Chinese markets will resume trading Thursday after the Golden Week holiday.
• In corporate news, Elon Musk's SpaceX is aiming to raise $40 billion, with Apollo leading, to purchase Nvidia AI chips, according to the FT, involving roughly $10 billion in bank loans and $30 billion in investment-grade debt.

Oil

On Wednesday, oil prices gained, with US West Texas Intermediate crude climbing back above $90 per barrel, as ongoing fighting between Saudi Arabia and Yemen's Iran-backed Houthis together with a storm approaching US oil-producing zones stoked supply disruption fears.

The storm developing in the Gulf of Mexico is predicted to become the first Atlantic hurricane of 2026 and may impact offshore output and coastal refineries. Separately, the Houthis claimed they attacked Riyadh's King Khalid International Airport, Abha Airport, and an air base at Khamis Mushait. Saudi authorities have not confirmed these claims. Confirmed attacks on airports in Jazan and Najran on Monday injured three people.

Gains were tempered by more positive supply news earlier in the week. The American Petroleum Institute's industry data showed a decline in US crude inventories last week, and official data from the Energy Information Administration are scheduled for release at 10:30 am ET (14:30 GMT).

Gold

Gold eased lower as the dollar strengthened and Treasury yields recovered in tandem with oil. Official data showed China's central bank extended its gold purchases to a 23rd consecutive month in September. The People's Bank of China's holdings increased to approximately 77.5 million fine troy ounces at month-end from around 76.7 million in August.

China has continued buying despite large price fluctuations this year. The value of its gold reserves dropped to about $324 billion from roughly $350 billion a month earlier, reflecting a drop of more than 6% in gold prices in September.

Currencies and rates

The US dollar advanced against major currencies. USD/JPY climbed toward 158.50, while EUR/USD edged back below 1.1240. Treasuries declined by about seven ticks, with yields recovering in line with oil prices as traders awaited the minutes of the Federal Reserve's latest policy meeting.

Asia-Pacific

In Japan, real wages increased for an eighth consecutive month in August, and a Reuters survey indicated manufacturer confidence near a five-year high despite a sharp drop in service-sector sentiment. Bank of Japan board member Ayano Sato, who voted against the September rate hike, stated she favors gradual rate increases without a predetermined pace.

In Australia, internal Reserve Bank documents reported by Bloomberg revealed staff modeling of the spending effects of a correction in AI stocks. Deutsche Bank noted that households are proving more resilient to rate hikes than anticipated.

The Reserve Bank of India is set to announce its policy decision at 04:30 GMT, with most economists forecasting a 25 basis point hike to 5.50%.

Ahead

The FOMC minutes are scheduled for Wednesday at 2:00 pm ET (18:00 GMT). Chinese markets will reopen on Thursday, 8 October, following the Golden Week holiday.