Oil Rises, Asian Stocks Fall as Middle East Tensions Mount — Update

By Sherry Qin and Kimberley Kao

Oil prices rose and Asian stocks fell as renewed tensions in the Middle East raised concerns about energy supplies, while technology earnings continued to draw scrutiny over the cost of artificial-intelligence investment.

The U.S. military has been preparing options for strikes on Iran, The Wall Street Journal reported, citing officials familiar with the planning. The preparations come despite President Trump's statement that the U.S. won't attack Iran before the Nov. 3 midterm elections. Two aircraft carrier strike groups are in the Middle East, with a third heading there from the Pacific.

Saudi Arabian authorities blamed Iran-backed Houthi militants for an attack on a civilian airport that resulted in casualties. The U.S. ordered nonemergency government employees and their families to leave Saudi Arabia, citing continuing threats from the Yemen-based group.

The developments added to concerns about oil supplies already disrupted by the conflict. U.S. crude inventories fell by a larger-than-expected 3.1 million barrels last week, Energy Information Administration data showed Wednesday.

Front-month WTI crude oil futures rose 1.9% to $98.96 a barrel, while front-month Brent crude oil futures jumped 2.1% to $111.12 a barrel.

Oil prices are likely to remain volatile and react sharply to political developments, particularly with WTI approaching the psychologically significant $100 mark, said Rania Gule, senior market analyst at XS.com.

Asian equities slumped as investors assessed the geopolitical risks alongside earnings from major technology companies. Higher energy prices threaten to raise costs for businesses and consumers, complicating central banks' efforts to contain inflation.

South Korea's Kospi fell 4.0% and Japan's Nikkei Stock Average was down 2.35%. China's Shanghai Composite Index declined 1.6% and Hong Kong's Hang Seng Index shed 3.2%. The Hang Seng Tech Index dropped over 5% to its lowest intraday level in two years.

"These movements suggest that investors are reducing exposure to risk-sensitive assets despite stronger performance in the previous U.S. trading session," said Naeem Aslam, CIO at Zaye Capital Markets.

Meta's results were a focus after the company reported record third-quarter revenue and beat market expectations, though its future funding plans for AI investments attracted scrutiny.

"Investors will reward growth and monetization, yet they're also becoming more sensitive to how the next leg of investment is financed and what it means for existing shareholders," Pepperstone head of research Chris Weston said in a note.

Nasdaq futures fell 1.6% during Asian trading, while S&P 500 futures declined 0.8%.

The weak sentiment suggests "that even strong earnings may no longer help investors overlook troubles elsewhere," said Ipek Ozkardeskaya, senior analyst at Swissquote.

"Rotation out of tech will likely continue, yet elevated energy prices and rising yields could cap gains in non-tech sectors, depending on their sensitivity to interest rates," Ozkardeskaya said.

Precious metals extended their declines as higher oil prices fueled inflation concerns.

Gold will likely experience continued consolidation in the near-term, with the risk of renewed declines, said Linh Tran, market analyst at XS.com.

A sustained improvement would require inflation to ease enough to reduce expectations of further rate increases, alongside significant declines in inflation-adjusted yields and the dollar, Tran said.

Spot gold fell 1.7% to $4,070.74 a troy ounce, while spot silver drolled 3.6% to $55.83 a troy ounce.

Regional currencies were mixed. The U.S. dollar was 0.2% higher at 94.6175 rupees, and gained 0.3% to 33.67 baht, but was 0.5% lower at 157.37 yen, LSEG data showed.

Write to Sherry Qin at sherry.qin@wsj.com and Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

October 22, 2026 02:42 ET (06:42 GMT)