Asian Stocks Slip as Elevated Oil Prices and Central Bank Meetings Weigh on Sentiment

Oil Shock and Middle East Conflict Pressure Markets

Asian markets traded in a cautious mood on Monday as the war in the Middle East entered its third week, keeping oil prices elevated. West Texas Intermediate (WTI) crude remained above $97 per barrel, while Brent crude traded above $104 per barrel.

Fears of supply disruptions persisted around the Strait of Hormuz, where tanker traffic has been disrupted by the conflict. The strait normally carries about 20% of global oil supply, making it a critical chokepoint for energy markets. The ongoing disruptions contributed to concerns about an oil supply shock, particularly for energy-importing economies.

The Indian rupee fell to a record low, with the currency pressured by the oil shock linked to the Iran war. Higher energy costs are a key risk factor for countries with significant oil import needs, adding to broader inflation and growth concerns.

Central Bank Meetings in Focus; U.S. and China in the Spotlight

Investors braced for a busy week of central bank decisions, including meetings of the U.S. Federal Reserve, the Bank of Japan (BOJ), and the Bank of England (BOE). Markets widely expect the Federal Reserve to keep interest rates unchanged while assessing inflation risks stemming from elevated oil prices. The BOJ is likely to hold rates steady on Thursday but signal a bias toward future rate hikes. The BOE is also expected to weigh its communication carefully as the war-driven oil shock adds to inflation pressures.

U.S. stock futures edged higher during Asian trading on Monday, following declines in the previous U.S. session. On Thursday, the S&P 500 closed at 6,632.19, down 0.61%; the Nasdaq ended at 22,105.36, down 0.93%; and the Dow Jones finished at 46,558.47, down 0.26%.

Gold prices steadied after briefly falling below key levels, with traders focused on developments in the Iran conflict and the upcoming Federal Reserve meeting. In corporate news, Xiaomi shares rose 5% ahead of an updated SU7 electric vehicle (EV) launch, highlighting selective sector gains against a backdrop of broader market caution.

FAQ

Why did most Asian stock markets fall on Monday?
Most Asian markets declined due to sustained high oil prices driven by the Middle East conflict, disruptions near the Strait of Hormuz, and investor caution ahead of key Chinese economic data and major central bank meetings.

How high are oil prices currently?
WTI crude prices remained above $97 per barrel, while Brent crude traded above $104 per barrel.

Which central banks are meeting this week and what are they expected to do?
The U.S. Federal Reserve, Bank of Japan, and Bank of England are all holding policy meetings. The Fed is widely expected to keep rates unchanged, the BOJ is likely to keep rates steady while signaling a rate-hike bias, and the BOE is expected to choose its wording carefully amid inflation pressures from higher oil prices.

What other key market moves were notable?
The Indian rupee hit a record low amid the oil supply shock linked to the Iran war, gold prices steadied after recent declines, U.S. stock futures edged higher in Asian trade, and Xiaomi shares gained 5% ahead of an updated SU7 EV launch.