Oil rises after US strike on Iran; RBA lifts rates to 18-year high, yuan falls
Crude prices edged higher following a US strike on Iran's Qeshm Island, while the Reserve Bank of Australia raised its cash rate to 4.85% and China's central bank tightened yuan liquidity.
Crude oil in Asian trade ticked up after a roughly 4% drop on Monday, as the United States struck sites on Iran's Qeshm Island following the downing of a US MQ-9 Reaper drone. A senior US official said the strike was a response to Iranian fire at a US aircraft and did not signal a broader campaign. President Donald Trump told reporters the United States had not been fighting Iran for months and answered “no” when asked about post-election strikes.
The Reserve Bank of Australia increased its cash rate by 25 basis points to 4.85% in a 6-3 vote, the highest level in 18 years. The board raised its inflation outlook, seeing headline inflation peaking at 4.5% and staying above 3% until late 2027. The Australian dollar weakened after the decision, which was widely expected.
The People’s Bank of China raised the foreign-exchange deposit reserve ratio for banks to 6% from 4% and set a weaker daily yuan fixing. The offshore yuan fell 0.26% to 6.6642 per dollar, its biggest daily decline since June.
Asian equity markets mostly followed the decline in US technology shares. South Korea’s Kospi slipped 3.7% and the Kosdaq fell 3.8%, while China’s Shanghai Composite dropped 0.7% and Hong Kong’s Hang Seng rose 0.4%. Japanese markets were closed for a public holiday.
Apple reported fourth-quarter revenue of about $114.5 billion, up 12%, and earnings of $2.10 per share. The company guided to 7%-10% revenue growth for the December quarter but projected a gross margin of 45%-46% as memory costs rise. Apple also announced a $24 billion share buyback. Palantir beat third-quarter estimates and lifted its full-year revenue outlook to roughly $8.5 billion. Oracle is reportedly pricing a $10 billion share sale at an 11% discount.