Asian financial markets started the week on solid footing, with regional stocks and the demonstrating notable resilience despite a backdrop of heightened geopolitical tensions and rising oil prices. Investor sentiment remained cautious but steady, supported by underlying economic strength and renewed appetite for risk in select sectors.
Stocks Hold Ground Across Asia
The MSCI Asia-Pacific Index outside Japan edged up slightly, maintaining momentum after last week’s mixed performance. Japan’s advanced by nearly 0.8%, driven by gains in technology and manufacturing stocks, as investors found comfort in stable earnings and export optimism. South Korea’s also added 0.5%, bolstered by chipmakers and improved foreign investor inflows.
China’s mainland markets showed modest gains, with the inching higher as investors continued to assess the impact of recent policy support measures. Meanwhile, Hong Kong’s traded relatively flat, weighed down by persistent concerns over China’s property sector and regulatory scrutiny on tech names.
Despite lingering uncertainties, equity markets in Asia appear to be pricing in a level of stability, underpinned by strong corporate results and a more measured tone from global central banks. With the U.S. Federal Reserve and other major policy makers signaling data-dependent approaches to rate decisions, investors are adjusting expectations accordingly.
Dollar Firm as Safe-Haven Appeal Lingers
In currency markets, the U.S. dollar remained firm against most major peers, supported by safe-haven flows and steady demand amid global risk aversion. The , which measures the greenback’s performance against a basket of currencies, held near recent highs, underpinned by geopolitical concerns and uncertainty around global growth.
The euro and British pound were slightly weaker, while the Japanese yen saw limited movement, reflecting a cautious market environment. Traders appear reluctant to make bold moves ahead of key economic data releases from the U.S. and Europe later this week.
Emerging market currencies in Asia, such as the Korean won and Indian rupee, faced mild pressure, as higher oil prices added to inflation concerns and weighed on trade balances.
Oil Prices Rise on Geopolitical Risks
Oil prices extended gains as geopolitical tensions—particularly the ongoing Israel-Iran conflict—stoked fears of potential supply disruptions. climbed above $86 per barrel, while West Texas Intermediate (WTI) hovered around $82, with both benchmarks supported by concerns over stability in key producing regions.
Market participants remain on alert over the possibility of conflict-driven supply shocks, especially involving critical transit points such as the Strait of Hormuz. With OPEC+ maintaining its cautious output stance and global demand forecasts remaining firm, the oil market remains sensitive to external shocks.
Higher energy prices are also feeding into broader market concerns around inflation and central bank responses. While headline inflation has eased in several economies, core inflation remains sticky—especially in energy-dependent regions—raising the stakes for future monetary policy decisions.
Market Outlook: Volatility Likely to Persist
As global investors navigate an environment shaped by geopolitical uncertainty, rising commodity prices, and cautious monetary policy, market volatility is expected to persist. However, the resilience seen in Asian equities and the U.S. dollar suggests that investors are not yet in panic mode.
Attention will now shift to key macroeconomic indicators, including U.S. retail sales, China’s industrial production, and inflation prints from several major economies. These data points will likely offer further clues into the direction of policy decisions and overall market health.
In the meantime, risk appetite may remain fragile, with energy prices and political developments acting as major swing factors. Investors are likely to continue balancing optimism over earnings and economic resilience with the reality of persistent global headwinds.
Disclaimer: Derivative investments involve significant risks that may result in the loss of your invested capital. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.
RISK WARNING IN TRADING: Transactions via margin involve leverage mechanisms, have high risks, and may not be suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be cautious of those who promise profits in trading. It’s recommended not to use funds if you’re not ready to incur losses. Before deciding to trade, make sure you understand the risks involved and also consider your experience.