Asian Markets Retreat as Geopolitical Tensions and Fed Anticipation Weigh on Sentiment

Asian indices faced broad selling pressure on Tuesday, driven by a combination of geopolitical instability in the Middle East and anxiety over upcoming monetary policy shifts. Brent crude prices climbed above $111 per barrel following reports that U.S. President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the two-month conflict. The global market is currently in a holding pattern ahead of Wednesday's Federal Reserve meeting, which marks the final session for Chair Jerome Powell. This anticipation, coupled with a steady policy rate from the Bank of Japan—which upgraded its inflation forecasts in a split 6-3 vote—has led to increased volatility in currency and commodity markets, with gold falling over 1% to $4,626 an ounce. In China, the Shanghai Composite fell 0.19% after Beijing ordered Meta to divest its $2 billion acquisition of AI startup Manus. This move highlights the intensifying technological rivalry between the U.S. and China over artificial intelligence. Additionally, battery maker CATL saw shares drop 1.7% following the announcement of a $5 billion share placement. Japanese tech stocks suffered significant losses, with SoftBank Group plunging 9.9% and Tokyo Electron declining 4.1%. The sell-off followed reports that OpenAI has failed to meet internal revenue and user growth targets in recent months. South Korea's Kospi bucked the trend, reaching a record high led by gains in the automotive sector, with Hyundai Motor rising 5.9%. Meanwhile, Australian markets extended a six-session losing streak as investors awaited domestic CPI data and the upcoming RBA meeting.