Markets in the Asia-Pacific region traded in divergence Tuesday as escalating unrest in Iran and fresh scrutiny of Federal Reserve Chair Jerome Powell weighed on investor sentiment. Oil prices rose on geopolitical risk, while equity indices showed modest gains and losses across sectors.
- Brent crude futures rose to $89.40 per barrel, up 2.1% on Iran-related supply concerns.
- U.S. crude futures (CL=F) reached $86.75 amid potential U.S. military escalation.
- Gold (GC=F) climbed to $2,345 per ounce as safe-haven demand increased.
- The U.S. Dollar Index (DXY) rose 0.4% to 104.25, reflecting risk-off sentiment.
- S&P 500 futures indicated a 0.2% decline, with Fed rate hike probability rising to 58%.
- Energy and utilities outperformed, while financials underperformed in Asia-Pacific markets.
Asian equity markets opened with mixed results as investors assessed escalating tensions in Iran and growing uncertainty over U.S. monetary policy. The S&P 500 futures pointed to a slightly lower open, while Japan’s Nikkei 225 gained 0.6% and China’s Shanghai Composite slipped 0.3%. The benchmark MSCI Asia Pacific Index edged up 0.1%, reflecting cautious optimism amid geopolitical headwinds. Oil markets reacted swiftly to the news, with Brent crude futures climbing to $89.40 per barrel, up 2.1% from the previous close. U.S. crude futures (CL=F) reached $86.75, driven by supply concerns amid ongoing protests and the potential for U.S. military involvement. Gold prices (GC=F) also advanced, reaching $2,345 per ounce, as safe-haven demand increased. The U.S. Dollar Index (DXY) gained 0.4%, reflecting stronger demand for the greenback amid global volatility. The potential for U.S. intervention in Iran has raised concerns over regional instability, which could disrupt oil flows through the Strait of Hormuz—a key chokepoint for global energy trade. Analysts note that a disruption could push crude prices above $95 per barrel. Meanwhile, the investigation into Fed Chair Powell’s conduct has added pressure on interest rate expectations, with markets now pricing in a 58% chance of a rate hike in March, up from 45% a week prior. Financial stocks in Asia were underperforming, with Japanese banks and Chinese insurers seeing losses of 0.7% to 1.2%. Energy and utility firms, however, posted modest gains, benefiting from higher oil prices and inflation hedging. Investors are now balancing geopolitical risks with central bank policy signals, leading to a fragmented market response across regions and sectors.