Oil Slump Eases Inflation Fears as Asian Markets Rally

A rally in Asian equities and government bonds was triggered by a sharp decline in oil prices, which eased concerns over inflation. The drop in energy costs reduced expectations of further monetary tightening, even as investors remained cautious over lingering geopolitical risks.

Oil prices plummeted after signs of de-escalation in the Gulf conflict raised hopes of improved oil flows. Brent crude fell 4.7% to $92.27 a barrel, while US West Texas Intermediate dropped 5% to $84.89. The decline in energy prices fuelled gains across Asian markets, with equity investors viewing the move as a relief for inflation and corporate costs.

The focus has now shifted to central banks, with key decisions expected from the US Federal Reserve, Bank of England, and Bank of Japan this week. Markets will also assess US second-quarter GDP figures and inflation data for clues on the interest-rate outlook. Corporate earnings are expected to drive market sentiment alongside macroeconomic developments.