Asian equity markets ended the week on a weak note as geopolitical tensions kept investors cautious. The ongoing conflict involving Iran and its regional rivals has driven oil prices close to the $100-per-barrel mark. The surge in energy costs has raised fears of renewed inflation pressure across global economies. As a result, Asian shares slipped for a second straight week.
Crude markets remained volatile throughout the week. Brent Crude hovered near $99.85 per barrel while West Texas Intermediate traded close to $95.05. Prices eased slightly after the United States issued a temporary permit allowing countries to purchase Russian oil shipments stranded at sea. Despite the relief, traders remain wary about supply disruptions.
Equity markets across the region reacted negatively to the uncertainty. The MSCI Asia Pacific Index slipped about 0.5 percent, marking a weekly decline of roughly 1.5 percent. Japan’s Nikkei 225 dropped 1.3 percent, while South Korean and Taiwanese markets also moved lower. Technology stocks were particularly affected.
The geopolitical situation has also influenced expectations about monetary policy. Investors had earlier anticipated substantial interest rate cuts from the Federal Reserve this year. However, rising oil prices and inflation concerns have forced traders to scale back those expectations significantly. Markets now anticipate only modest easing in interest rates.
Currency markets reflected the shift in sentiment as the US dollar strengthened against most major currencies. Meanwhile, bond yields climbed, signaling reduced optimism about policy easing. Investors are now turning their attention to a series of upcoming central bank meetings next week. These decisions will likely shape market direction in the near term.