Asian Markets on Edge as Oil Prices Soar and Yields Rise

Asian financial markets remain cautious ahead of crucial monetary policy meetings in the US and Japan. Rising crude oil prices have added to the uncertainty, with Brent crude hitting $106.96 a barrel following renewed concerns over oil supplies from the Middle East.

The increase in oil prices comes after a new Houthi attack on Saudi Arabia and the kingdom's east-west pipeline being targeted by Iran-backed fighters in Iraq. The Gulf Arab states have postponed planned talks with Iran due to the rising tensions.

The US Federal Open Market Committee is meeting on Tuesday, with markets expecting a 90% probability of an interest-rate increase. This would be the first hike since mid-2023. Meanwhile, bond yields have also moved higher, with the benchmark 10-year US Treasury yield reaching 5% for the first time since 2023.

Asian equities traded mixed on Tuesday, with MSCI's broadest index of Asia-Pacific shares outside Japan declining by 0.12%. South Korean equities fell 0.25%, while Japan's Nikkei reversed early losses to gain 0.19%.