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Last updated: March 29, 2026, 11:30 PM ET

Geopolitical Shockwaves Hit Energy & FX Markets

Global energy markets experienced significant turbulence as fears of a widening Middle East conflict pushed oil prices sharply higher, with Brent crude climbing 3 per cent in early Asian trading, briefly jumping to $116 a barrel following signs of escalation involving Iran. This supply shock immediately impacted commodity markets, causing aluminum to surge around 6% after Iranian strikes targeted production sites in the UAE and Bahrain, threatening supply chains that account for a major portion of global output. The conflict is also prompting major consumers to revert to coal as a backup energy source, potentially undermining decarbonization efforts, while nations like Australia face exposure risks due to reliance on imported refined fuels.

Currency volatility intensified across Asia as the escalating war prompted risk aversion and central bank responses. The Japanese yen edged away from its weakest level since mid-2024 following strong warnings from the top currency official that authorities might take "bold action" if conditions persist, including speculation that the government might even intervene in crude oil markets to stabilize sentiment. Meanwhile, the Indian rupee hit a fresh low, forcing the Reserve Bank of India to step in and introduce its most forceful curbs in over a decade to stifle speculative bets against the currency, as the cost of defending the rupee swells amid intervention. The Singapore dollar consolidated modestly, though analysts caution it remains vulnerable to further widening of the Mideast tensions.

Global Sovereign Debt & Equities

Sovereign bonds rallied across the globe, reflecting growing concerns that the Middle East conflict will derail fragile global economic growth, with government debt demand reviving. This market shift is manifesting differently across Asia; in Japan, the yield curve extended its steepening trend, driven by thin liquidity and fiscal year-end positioning rather than just global rates, according to State Street Investment. Conversely, major Wall Street bond managers at JPMorgan and Pimco suggest that markets are currently underestimating the severity of a potential economic slowdown stemming from the war. On the equity front, Asian markets broadly declined on growth concerns, while Japanese stocks slid further specifically due to worries about the economic fallout from steeper oil prices.

Emerging Markets & Capital Flows

Foreign capital has been rapidly exiting riskier assets, particularly in India, where investors dumped a record $12 billion in equities during March, overwhelmed by surging energy costs and the broader global retreat from risk. This broad emerging market rout, however, is attracting contrarian bets, with firms like TT International and Alliance Bernstein wagering that the current turmoil presents a buying opportunity, anticipating future rate cuts. In capital market development, New Zealand is aiming to address a trading gap by reintroducing S&P/NZX 20 Index Futures starting in late April. Elsewhere, China is attempting to meet domestic demand for offshore assets by raising the institutional investor quota for overseas securities purchases by the largest margin seen since 2021, signaling continued financial opening efforts.

Private Markets & Corporate Dynamics

Private credit funds are facing scrutiny as analysis reveals their exposure to the struggling software industry is larger than publicly disclosed in filings. This sector strain is creating opportunities for distressed-debt investors who are now targeting the private credit downturn, viewing it as the greatest opportunity since 2008. In corporate strategy, Apollo Global Management is planning to establish a second corporate headquarters in a southern U.S. state as part of its expansion strategy. Meanwhile, in Hong Kong, the recent momentum in share sales is encountering headwinds, raising the pressure on upcoming jumbo IPO transactions.

Regulatory & Political Maneuvers

Asian political leaders are navigating domestic economic pressures amid global instability. In Malaysia, Prime Minister Anwar Ibrahim has urged caution against the immediate public release of a report concerning his anti-graft chief’s shareholdings. In South Korea, the CEO of the nation's $1 trillion pension fund suggested that the recent weakness in the won may necessitate stabilization action. In the U.S., political spending on technology policy is heating up, with a pro-AI group planning to spend $100 million on the midterm elections to counter growing regulatory backlash, while another group, Innovation Council Action, plans to spend at least that amount to promote the Trump A.I. agenda. In Europe, the UK government is under pressure to review its contract with Palantir, with ministers exploring triggering a break clause in the controversial firm’s NHS data systems agreement.