Asian Markets Eye Gains as Oil Falls, BOJ Rate Hike Looms
Equity futures for Japan, South Korea, and Australia point higher today, following a Wall Street rally and easing inflation fears as Brent crude dipped below US$105.
Asian Markets Anticipate Gains
Asian stocks and bonds are poised for advances today, 18 September 2026. This follows a rally on Wall Street, where the S&P 500 climbed 1.1% and the tech-heavy Nasdaq 100 gained 1.7%, marking their largest advance in six weeks. A key index of chipmakers also saw a 3.1% rise.
Futures contracts for equity indices in Japan, South Korea, and Australia all indicate an upward trend at market open. The positive sentiment is largely attributed to a decrease in oil prices, which has alleviated some concerns regarding inflation and encouraged a renewed appetite for risk assets.
Oil Prices Ease on Supply Outlook
Global benchmark Brent crude closed below US$105 a barrel yesterday, marking its second consecutive session of declines. This price moderation comes as physical oil markets show signs of cooling from recent peaks.
Supply concerns from the Middle East have also lessened, with Saudi Arabia working to restore approximately half the capacity of its critical East-West pipeline within days, after it was shut last week following drone strikes.
Further easing potential disruptions, China reportedly urged Iran to help curb Yemen's Houthi militants, which could stabilise shipping lanes around the Bab el-Mandeb strait.
Despite these developments, Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, noted that supplies remain tight and geopolitical risks, including conflicts involving the US, Iran, Russia, and Ukraine, continue to elevate prices.
Central Banks and Bond Market Shifts
The Federal Reserve's hawkish stance, communicated after its rate decision on Wednesday, initially led to a rally in US Treasuries. The 10-year yield fell nine basis points to 4.93% yesterday, after briefly touching 5.02% on Wednesday.
In Europe, UK government bonds also saw a rally after the Bank of England cancelled plans to sell long-dated gilts as part of its quantitative tightening programme, offering relief to a market where 10- and 30-year yields had reached their highest levels since 2007 and 1998 respectively.
Attention in Asia now shifts to the Bank of Japan's (BOJ) policy decision, expected later today. A Bloomberg survey indicates that all respondents anticipate the central bank will raise its policy rate to 1.25% from 1%. Ahead of this announcement, the Japanese yen remained largely unchanged at 156 per US dollar.
The Bank of Japan's rate decision today will be a critical determinant for the yen's trajectory and broader market sentiment across Asia. Following a sharp depreciation against the US dollar after the Federal Reserve's recent hawkish rate hike, the yen's stability hinges on the BOJ's actions.
Glenn Yin, director of research at ACCM in Melbourne, warned that a disappointing outcome from the BOJ, failing to deliver a clear hawkish message or a sufficient rate increase, could see the yen weaken rapidly towards 160 per dollar.
For Asian investors, the BOJ's commitment to further tightening, coupled with easing global inflation concerns from falling oil prices, will shape expectations for regional bond yields and capital flows in the coming weeks.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
Comments.
Comments are moderated. We remove what is unlawful, abusive or off-topic, and and you remain responsible for what you post.
Reader comments open soon. Until then, corrections and responses go to our newsroom, and we publish what we get wrong on Corrections.