Asia shares decline as worries about rising oil prices outweigh perks from strong earnings

TOKYO (AP) — Asian shares declined in early Tuesday trading, as rising oil prices and worries about inflation worked as a dampener on some markets, countering the optimism that had come from robust corporate earnings reports.

Japan's benchmark Nikkei 225 dipped 1.6% to 68,098.54. Australia's S&P/ASX 200 edged up 0.2% to 9,088.60. South Korea's Kospi reversed course after surging earlier to drop 0.6% to 6,933.60. Hong Kong's Hang Seng lost 0.6% to 25,289.88, while the Shanghai Composite shed 0.5% to 3,963.53.

Analysts said robust earnings reports in Asia, following those from the U.S., are helping counter worries about what the war in Iran will do to the global flow of crude and its impact on energy prices. Japan, for one, imports almost all its oil.

“First, the beneficiary base from AI investment has broadened. Demand spread across a wide range of industries, including semiconductor production equipment, power equipment, machinery, electronic components, and materials. AI demand effectively helped rediscover globally competitive companies across these sectors,” Masashi Akutsu and Tetsuhiro Tokuyama said in a recent report for BofA Securities.

They noted the recent strong earnings reports out of Japanese companies for the April-June quarter, adding that, just as with the U.S. Federal Reserve, the Bank of Japan will likely start moving to raise interest rates in the next few months.

On Wall Street, stocks edged further away from their record heights on Monday. The S&P 500 fell 0.5% but remains near its all-time high set Thursday. The Dow Jones Industrial Average dropped 272 points, or 0.5%, and the Nasdaq composite slipped 0.3%.

Wall Street’s losses solidified in the afternoon when oil prices accelerated upward. Benchmark U.S. crude added 34 cents to $84.84 a barrel in Asian trading early Tuesday.

The price for a barrel of Brent crude, the international standard, rose 21 cents in Tuesday trading to $91.08 a barrel. It gained 2.7% to $90.87 on Monday.

Last month alone, the Brent zigzagged between $72 and $102 as hopes rose and fell that the United States and Iran could reach a deal that would allow oil tankers to freely exit the Persian Gulf again.

The rally in oil prices sent Treasury yields in the bond market higher, which in turn raised the pressure on the economy and prices for all kinds of investments.

The yield on the 10-year Treasury climbed to 4.72% from 4.68% late Friday. It has shot up from just 3.97% before the war with Iran, largely because higher oil prices are worsening inflation and upping the probability that the U.S. Federal Reserve will have to hike interest rates.

Higher rates could keep a lid on inflation, but they do so by intentionally slowing the economy. The average long-term U.S. mortgage rate has already jumped near its highest level in a year because of the rise in the 10-year Treasury yield, though reports last week said that inflation in July was not as bad as earlier in the summer.

All told, the S&P 500 fell 40.70 points to 7,745.06. The Dow Jones Industrial Average dropped 272.63 to 53,459.78, and the Nasdaq composite slipped 84.25 to 26,644.91.

In currency trading, the U.S. dollar rose to 159.43 Japanese yen from 159.37 yen. The euro cost $1.1585, inching up from $1.1581.

AP Business Writer Stan Choe contributed to this report.

Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

A general view shows the New York Stock Exchange, Friday, Aug. 7, 2026, in New York. (AP Photo/Yuki Iwamura)

People walk past the Nasdaq MarketSite, Thursday, Aug. 6, 2026, in New York. (AP Photo/Yuki Iwamura)

A person walk in front of an electronic stock chart board showing Japan's Nikkei index at a securities firm Tuesday, Aug. 18, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walk in front of Tokyo Stock Exchange Tuesday, Aug. 18, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

People look at an electronic stock chart board showing Japan's Nikkei index at a securities firm Tuesday, Aug. 18, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

GALLE, Sri Lanka (AP) — India was heading towards a win over Sri Lanka with six more wickets needed after four days of the first test at Galle International Stadium on Tuesday.

India was all out for 193 in its second innings midway through the day, setting Sri Lanka an improbable winning target of 372 in four-plus sessions.

By stumps, Sri Lanka was 84-4, trailing by 287 runs. Sonal Dinusha and captain Dhananjaya de Silva thwarted India's charge by safely reaching stumps.

First innings centurion Dinusha was 25 not out off 36 balls and de Silva was on 31 from 73 balls.

In the morning session, India lost four wickets to reach 116-4 at lunch. It kept an eye on quick scoring and possible bad weather in order to force a win.

Rishabh Pant led the way for India on either side of lunch. He hit 50 off 53 balls including eight fours and two sixes. Pant was out for 66 off 69.

Devdutt Padikkal added 44 off 75 and Lokesh Rahul 35 off 47 before India was all out for 193 in 48.5 overs.

Left-arm spinner Prabath Jayasuriya picked two wickets before lunch, including trapping Shubman Gill on 8, while pacer Asitha Fernando took 4-31.

Pant and Ravindra Jadeja (9) combined for 54 off 60 balls until Pant was sent back in the 41st over by Lahiru Kumara. India lost its last four wickets for just 19 runs.

Sri Lanka’s second innings was delayed due to a passing shower, but it didn’t get a good start after play resumed.

Mohammed Siraj bounced out opener Nishan Madushka for 6 and Manav Suthar struck twice. Lahiru Udara was caught on 16 and Suthar trapped Pasindu Sooriyabandara for a golden duck.

Sri Lanka was 21-3 in the 11th over then 47-4 in the 22nd when Kamindu Mendis was caught on 2 at slip off Prasidh Krishna.

De Silva and Dinusha dug deep to bat out the last hour. They face six more hours on the final day on Wednesday.

See AP’s full cricket coverage here

Sri Lanka's Asitha Fernando, right, celebrates taking the wicket of India's Yashasvi Jaiswal during the day four of the first cricket test match between Sri Lanka and India in Galle, Sri Lanka, Tuesday, Aug. 18, 2026. (AP Photo/Eranga Jayawardena)

Sri Lanka's Asitha Fernando celebrates taking the wicket of India's Yashasvi Jaiswal during the day four of the first cricket test match between Sri Lanka and India in Galle, Sri Lanka, Tuesday, Aug. 18, 2026. (AP Photo/Eranga Jayawardena)

India's KL Rahul plays a shot as Sri Lanka's Niroshan Dickwella watches during the day four of the first cricket test match between Sri Lanka and India in Galle, Sri Lanka, Tuesday, Aug. 18, 2026. (AP Photo/Eranga Jayawardena)