Asian markets declined on Friday as rising tensions linked to the conflict involving Iran, the United States, and Israel continued to weigh on investor sentiment. The uncertainty has kept oil prices elevated, close to the $100-per-barrel level, fueling concerns about global inflation. As a result, regional equities headed toward their second consecutive week of losses. Investors are increasingly cautious amid fears that the conflict could expand.
Crude oil prices remained near key levels even after easing slightly in early trading. Brent Crude futures traded around $99.85 per barrel, while West Texas Intermediate stood near $95.05. The slight decline came after Washington issued a temporary 30-day license allowing countries to purchase Russian oil currently stranded at sea. However, analysts say supply concerns remain.
Stock markets across Asia reflected the uncertainty. The MSCI Asia Pacific Index fell about 0.5 percent and was on track for a weekly drop of roughly 1.5 percent. Japan’s Nikkei 225 declined 1.3 percent, while South Korean technology shares and Taiwanese stocks also recorded notable losses. Investors remain wary of the economic impact of prolonged geopolitical tension.
The rising risk of inflation has changed expectations around global monetary policy. Traders now expect only about 20 basis points of rate cuts this year from the Federal Reserve, compared with around 50 basis points previously priced in by markets. Analysts say higher oil prices could reduce the likelihood of aggressive policy easing. This shift has pushed bond yields higher in recent sessions.
Currency markets also reacted to the turmoil. The US dollar strengthened as investors sought safer assets, while the euro and other major currencies faced pressure. Gold prices rose slightly but were still heading for a weekly decline. Market participants now await upcoming central bank meetings, including those of the Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England.