Asian stock markets declined sharply as the ongoing Iran conflict kept oil prices elevated near $100 per barrel, fueling inflation concerns and dampening expectations of interest rate cuts. Investors are increasingly cautious as geopolitical tensions continue to disrupt global markets.
Benchmark indices across the region fell, with Japan’s Nikkei 225 dropping significantly, while South Korean and Taiwanese markets also posted losses. Broader regional indices tracked a second consecutive week of decline.
Crude oil prices remained high due to disruptions in the Strait of Hormuz, a vital shipping route affected by escalating tensions involving Iran. Brent Crude hovered near $100 per barrel, while West Texas Intermediate stayed close to $95, keeping pressure on global economies.
The US Dollar strengthened as investors sought safe-haven assets, weighing on other currencies. At the same time, expectations for rate cuts by the Federal Reserve have weakened, with markets now anticipating fewer reductions due to rising inflation risks.
Bond yields climbed as investors adjusted to a higher interest rate outlook, while global equities continued to face selling pressure. Analysts warn that sustained high oil prices could further increase volatility and limit the scope for monetary easing in the near term.
Attention now turns to upcoming policy meetings by major central banks, including the Bank of Japan and the European Central Bank, as markets look for signals on how policymakers will respond to the evolving economic landscape.