Asian share markets opened cautiously on Monday, with oil prices retreating from six-month highs. Brent crude slipped 1.0% to $115.48 a barrel, while WTI fell 1.1% to $102.08. The declines came amid reports of Qatari-mediated talks in Tehran aimed at easing regional tensions. Last week, Brent surged 6.2%, its highest weekly close since mid-2022, due to Houthi attacks in Saudi Arabia that raised supply concerns.
The Hong Kong market eased 0.1%. Rising oil prices are adding to inflationary pressures, a concern for central banks meeting this week. Bruce Kasman, global head of economics at JPMorgan, noted that a ‘relatively shallow rate hike cycle is underway,’ with Canada, the UK, and Sweden expected to tighten policy soon.
In the US, markets anticipate the Federal Reserve will hold rates in October but hike in December, with an 80% probability. Analysts at Goldman Sachs warned that higher oil prices could broaden inflationary pressures, complicating the Fed’s decision. Key earnings reports from hyperscalers like Microsoft, Amazon, and Alphabet will test investor confidence in the AI-driven market rally.
Goldman Sachs analysts also highlighted that oil futures exceeding forecasts pose risks, particularly if geopolitical tensions with Iran escalate. Meanwhile, the Japanese yen strengthened, retaining its safe-haven appeal, while the euro and sterling held steady amid political uncertainties in France and rising energy costs in the UK.