Asian shares take a breather: Japanese Yen weakens sharply; Brent and WTI crude prices fall after overnight spike

Asian shares paused their recent rally on Thursday as investors positioned for month- and quarter-end flows, while the Japanese yen weakened to fresh lows against the euro and the Swiss franc surged amid currency market volatility.Oil prices slipped after climbing over 2% overnight to seven-week highs, following a surprise drop in US crude inventories that raised supply concerns amid export issues in Iraq, Venezuela, and Russia.S&P 500 futures and Nasdaq futures edged up 0.1% ahead of remarks from Federal Reserve officials, which investors will watch closely for guidance on interest rates.San Francisco Fed President Mary Daly said further rate cuts will likely be needed, though the timing remains uncertain. Fed Chair Jerome Powell had recently taken a cautious stance on additional rate cuts after the central bank delivered its first easing this year last week.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, after gains of 5.5% for the month and 9% for the quarter. Japan’s Nikkei rose 0.1%, following jumps of 7% for the month and 13% for the quarter. Chinese blue chips were flat, while Hong Kong’s Hang Seng slipped 0.2%.Tony Sycamore, analyst at IG, said, as quoted by Reuters, “Depending on whether funds are mandated to rebalance monthly or quarterly, the rebalancing flows should result in selling in US and Japanese indices. While the German and Australian stock markets are likely to be the beneficiaries of rebalancing buying.”Overnight, Wall Street closed lower for a second consecutive session as investors booked profits from record-high stocks. Futures imply a 92% chance of a Fed rate cut in October, though total expected easing has dropped to 100 basis points from 125 basis points a few weeks ago.Attention will turn to upcoming US economic data, including the Fed’s preferred inflation gauge, the Personal Consumption Expenditures report on Friday, and the final estimate for Q2 GDP on Thursday, amid concerns over a potential government shutdown.Treasury yields were largely stable as markets absorbed heavy corporate and government bond supply. The benchmark US 10-year Treasury yield was flat at 4.1408%, after rising 3 basis points overnight. The treasury department will auction $44 billion in seven-year notes, following earlier auctions of five- and two-year notes.

The dollar slipped 0.1% to 148.77 yen, after gaining 0.9% overnight. The yen was the biggest loser, hitting an over one-year low on the euro at 174.78 and an all-time low on the Swiss franc at 187.30 yen. The Swiss National Bank is expected to hold its policy rate at zero, marking its first pause since late 2023.

Spot gold prices were flat at $3,739 an ounce, after slipping 0.7% overnight amid a stronger dollar. US crude fell 0.4% to $64.73 a barrel, while Brent dipped 0.3% to $69.11.Vivek Dhar, commodities strategist at the Commonwealth Bank of Australia, said, as quoted by Reuters, “Brent oil futures have continued to find support in the $65‑70/bbl range despite market forecasts of a deep oversupply in Q4 2025 and Q1 2026.”He added there is slight upside risk to his forecast of Brent falling to $60 a barrel next quarter.