Yen Surges Amid Interest Rate Hints, Oil Prices Near $100

The yen surged on Tuesday to its strongest rally in two years after the Bank of Japan indicated it may raise interest rates, while stocks fell as Brent crude futures hit their highest in six weeks near $99 a barrel.

The attacks by Yemen's Iranian-backed Houthis on energy facilities and cities in Saudi Arabia drove oil prices up, with diesel hitting record highs nearly doubling from before the conflict. The price of gasoline also reached new heights, and physical crude for immediate delivery was trading above futures prices.

Central banks are under pressure to raise interest rates due to a resurgence in inflation, which has knocked equity markets over the past few weeks. The European Central Bank is set to raise euro zone rates by a quarter point on Thursday, and the chances of the Bank of Japan doing the same next week are intensifying.

Equity markets in Europe slipped, with the STOXX 600 down 0.4%, while futures on the S&P 500 were off 0.3% and those on the Nasdaq were up 0.1%. The yen has gained nearly 4% in the last week alone, its largest week-on-week increase since July 2024.