Asian bourses retreated on Thursday, with Japan’s benchmarks recording the deepest losses after the Bank of Japan elected to keep its short-term policy rate unchanged and explicitly signalled that higher oil prices and the intensifying Middle East conflict add uncertainty to the inflation outlook.
Regional markets weakened after a retreat on Wall Street overnight that followed a hawkish message from the Federal Reserve; futures tied to U.S. stocks were largely unchanged through Asian trading hours.
BOJ decision and internal dissent
The Bank of Japan left its short-term policy rate at 0.75%, a move that was widely expected by market participants. Policymakers described the choice as a pause in tightening while they evaluate the impact of imported inflation and other external shocks. In its communique, the board warned that the future trajectory of the Middle East conflict and movements in crude oil prices could materially influence Japan’s inflation path, a particular concern for a country that relies heavily on energy imports.
One board member dissented. Hajime Takata preferred a 25 basis-point rise, highlighting that some officials see a need for a firmer policy response if price pressures persist.
Market moves across the region
- Japan’s Nikkei 225 fell 2.6% and the broader TOPIX index slid 2%.
- South Korea’s KOSPI dropped 1.3%.
- Singapore’s Straits Times Index edged down about 0.5%.
- China’s Shanghai Composite and the Shanghai Shenzhen CSI 300 each slipped 1%.
- Hong Kong’s Hang Seng index declined roughly 1.5%.
In other regional moves, Australia’s S&P/ASX 200 decreased 1.5% after data showed the unemployment rate rose in February alongside a decline in full-time employment. Futures tied to India’s Nifty 50 were up about 0.4%.
Oil, geopolitics and market sentiment
Oil was a central driver of market sentiment. Brent crude climbed above $110 a barrel on Wednesday and extended gains into Asian trade on Thursday. The recent surge in oil prices followed a string of attacks on energy facilities across the Middle East after a strike on Iran’s South Pars gas field.
Regional authorities said the incidents inflicted substantial damage: Qatar attributed extensive damage at the Ras Laffan energy hub to Iranian missiles, while Saudi Arabia reported intercepting ballistic missiles and drone attacks targeting energy infrastructure. Market participants cited a heightened risk of prolonged supply disruption through the Strait of Hormuz, a channel that handles about a fifth of global oil and liquefied natural gas flows.
Overall market sentiment was also influenced by the Federal Reserve’s rate-hold decision earlier in the week, which carried a hawkish tone and helped pressure risk assets globally.
This article reports market moves, central bank actions and geopolitical developments as stated by official releases and market indicators. Where available, percentage moves and specific descriptions of events are presented exactly as reported.