Asian equities fell sharply on Friday as ongoing conflict in the Middle East continued to unsettle financial markets. The dispute involving Iran and the United States has pushed oil prices toward the critical $100-per-barrel level. Investors fear the situation could worsen, triggering higher energy costs and renewed inflation. The result has been a broad sell-off in regional stock markets.
Oil prices stayed elevated despite a modest decline in early trading. Brent Crude was trading near $99.85 per barrel, while West Texas Intermediate stood around $95.05. The slight dip followed a decision by Washington to allow temporary purchases of Russian oil shipments currently stranded at sea. Still, markets remain sensitive to supply risks.
Across Asia, stock indices reflected the cautious mood. The MSCI Asia Pacific Index slipped 0.5 percent, putting it on track for a weekly decline of about 1.5 percent. Japan’s Nikkei 225 fell 1.3 percent, while South Korea and Taiwan also recorded losses. Technology shares led the decline as investors reduced exposure to riskier assets.
The surge in oil prices has also affected expectations for interest rate policy. Traders now anticipate fewer rate cuts from the Federal Reserve compared with earlier forecasts. Higher energy costs could increase inflation pressures, forcing central banks to maintain tighter policies for longer. This shift has pushed government bond yields higher.
The US dollar strengthened during the market turmoil as investors sought safer assets. Meanwhile, gold prices moved slightly higher but were still on track for a weekly decline. Market attention is now shifting toward upcoming policy meetings by major central banks. These include the Federal Reserve, the European Central Bank, and the Bank of England.