Washington, United States. Oil prices were set for their largest monthly rise on record on Tuesday while Asian equities were on course for their steepest monthly decline in six years, as war in the Middle East heightened concerns over inflation and global growth.
Oil and gold move higher
Brent crude rose 0.24% to $113.05 a barrel, on track for a 56% monthly gain, its largest on record. US crude held near $102.98 a barrel and was headed for a monthly rise of roughly 54%, the most in nearly six years. Gold climbed 1.2% to $4,564.73 an ounce.
Asian equities extend monthly losses
MSCI’s broadest index of Asia-Pacific shares outside Japan was set to fall more than 13% for the month, its sharpest decline since March 2020. Japan’s Nikkei fell 1.27% and was poised to lose nearly 13% in March, while South Korea’s Kospi was on course for a monthly drop of more than 18%, its worst since 2008.
“It appears markets have gone from just mechanically trading headlines into a little bit more of a fear mode, taking risk off the table,” said Vishnu Varathan, Mizuho’s head of macro research for Asia ex-Japan.
Futures rise after report on Trump stance
Sentiment improved slightly after the Wall Street Journal reported that President Donald Trump had privately told aides he was prepared to end the military campaign against Iran even if the Strait of Hormuz remained largely closed. Nasdaq futures rose 0.73%, S&P 500 futures gained 0.84%, and European futures edged higher.
Rate expectations shift as Fed signals patience
Markets have repriced interest-rate expectations, with investors now pricing the Federal Reserve keeping rates on hold for 2026, reversing forecasts of more than 50 basis points of cuts that were in place before the war began. Fed Chair Jerome Powell said on Monday the central bank could afford to wait and assess how the conflict affects the economy and prices.
Treasury yields climb; dollar strengthens
US Treasury yields reflected the shift, with the two-year yield set to rise more than 40 basis points for the month, its largest monthly increase since October 2024. The benchmark ten-year yield advanced around 36 basis points in March, its biggest monthly move since December 2024.
The dollar was headed for its strongest monthly gain since July, rising roughly 2.9% against a basket of currencies. The euro was down nearly 3% in March, sterling fell more than 2%, and the yen hovered near 159.63 per dollar, close to the 160 level.
Asian currencies hit record lows; investors cut exposure
The Indian rupee, Indonesian rupiah and Philippine peso fell to record lows against the dollar this month.
“For the long Asian currencies positions, we have closed them out,” said Ang Ze Yi, senior portfolio manager for Asian fixed income at AllianzGI. “We still like them on a structural basis, but for now, we have neutralised and just want to let the volatility and uncertainty die down first.”
How are the moves in oil prices and the US dollar affecting your expectations for inflation and interest rates?
