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

Geopolitical Tensions and Energy Markets Roil Asia

Escalating conflict in the Middle East sent global energy markets reeling, with oil futures jumping past $116 a barrel amid signs of war escalation and the blockage of critical energy supplies near the Strait of Hormuz. Brent crude climbed 3 per cent in Asian trading as Iran struck production sites in the UAE and Bahrain, causing aluminum to surge around 6% due to threats to regional output. The resulting energy shock is forcing major consumers to revert to coal usage as gas supplies are upended, while in the U.S., Americans are rethinking travel plans as gasoline prices near $4 a gallon, a situation the UK Chancellor urged allies to confront without resorting to energy protectionism.

Asian Currencies Under Pressure Amid Risk Aversion

Rising oil prices and geopolitical instability fueled a flight to safety, causing significant strain on several Asian currencies while bolstering sovereign debt markets globally. The Indian rupee plunged to a fresh low, compelling the Reserve Bank of India to step in as intervention costs swelled, leading the nation to curb speculative bets against the currency as foreign investors dumped a record $12 billion in Indian stocks during March due to surging energy costs. Similarly, the South Korean won’s weakness prompted the chief executive of the nation’s $1 trillion pension fund to suggest that action may be necessary to stabilize the currency, while the Singapore dollar consolidated cautiously against the greenback, bracing for further impact.

Japan Intervenes on FX as Safe Haven Demand Rises

Tokyo’s currency officials delivered their strongest warnings yet against speculators, with Japan’s top FX chief stating that authorities are ready to take ‘bold action’ if the yen continues to weaken, pushing the currency back from its weakest level since July 2024. This intervention threat occurred as Japanese stocks declined sharply, reacting both to the stronger yen and increased worries regarding the economic drag from higher oil prices. Concurrently, the Japanese government bond yield curve continued its steepening trend due to thin liquidity and a lack of demand from real-money buyers, even as global sovereign bonds rallied worldwide on broader economic slowdown fears sparked by the Middle East conflict.

Capital Markets Activity and Regulatory Focus

Capital markets saw mixed signals across Asia, with China taking steps to facilitate outbound investment while Hong Kong IPO momentum faced hurdles. Beijing raised the quota cap for institutional overseas securities purchases by the largest margin since 2021, signaling a push for financial opening to meet domestic demand for offshore assets. Conversely, the recent surge in Hong Kong share sales is encountering headwinds, increasing pressure on several jumbo transactions slated for the near future. Meanwhile, New Zealand is addressing a long-standing market deficiency by preparing to launch futures based on the S&P/NZX 20 stock index by late April.

Shifts in Credit, Regulation, and Political Finance

Attention turned to the private credit sector, where analysis revealed that the industry’s exposure to the ailing software sector is larger than previously disclosed across major funds, a strain that is attracting distressed-debt funds anticipating the "greatest opportunity since 2008". In political finance, a pro-AI group announced plans to spend $100 million on the U.S. midterm elections, positioning the November 8 poll as a key battleground over forthcoming AI regulation. Elsewhere, Malaysian Prime Minister Anwar Ibrahim urged caution against the immediate public release of a probe report concerning his anti-graft chief’s shareholdings.