Asian equities staged a broad rebound on Tuesday, March 17, 2026, as investors cautiously returned to risk assets following Wall Street’s overnight rally — even as surging oil prices and a packed central bank calendar kept uncertainty firmly in the driver’s seat.
Market Overview: A Cautious Rebound
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.1%, with South Korea’s KOSPI leading the pack at +2.3%. The rally followed Monday’s Wall Street rebound, where the S&P 500 rose 1.0% to snap a four-day losing streak on gains in AI-related stocks, according to Reuters.
However, analysts remain cautious. “The war premium on oil and geopolitical uncertainty make it difficult to establish a new directional trend,” said Chris Weston, head of research at Pepperstone Group, as reported by Reuters. “I remain reluctant to buy dips at this stage.”
Asian Indices at a Glance
| Index | Close | Change | % Change |
|---|---|---|---|
| KOSPI (South Korea) | 5,640.48 | +90.63 | +1.63% |
| SET (Thailand) | 1,436.45 | +31.43 | +2.24% |
| TAIEX (Taiwan) | 33,836.57 | +494.06 | +1.48% |
| STI (Singapore) | 4,925.14 | +56.45 | +1.16% |
| KLCI (Malaysia) | 1,709.37 | +12.81 | +0.76% |
| NIFTY 50 (India) | 23,560.05 | +151.25 | +0.65% |
| BSE SENSEX (India) | 75,895.89 | +393.04 | +0.52% |
| ASX 200 (Australia) | 8,614.30 | +30.90 | +0.36% |
| Hang Seng (Hong Kong) | 25,895.47 | +61.45 | +0.24% |
| NZX 50 (New Zealand) | 13,182.23 | +17.65 | +0.13% |
| Nikkei 225 (Japan) | 53,700.39 | -50.76 | -0.09% |
| Shanghai Composite (China) | 4,049.91 | -34.88 | -0.85% |
| Shenzhen Component (China) | 14,039.73 | -267.85 | -1.87% |
Source: CNBC Asia Markets, Reuters Asian Markets — data delayed at least 15 minutes.
South Korea & Taiwan Lead the Rally
South Korea’s KOSPI surged 1.63% to 5,640.48, leading the regional rally. Taiwan’s TAIEX jumped 1.48% to 33,836.57, lifted by technology and semiconductor stocks that rode the wave of Wall Street’s AI-driven bounce. Thailand’s SET index posted the day’s strongest gains at +2.24%, reflecting a recovery in risk appetite among Southeast Asian markets.
Japan: Nikkei Flat Amid Yen Worries and BOJ Spotlight
Japan’s Nikkei 225 edged down 0.09% to 53,700.39, underperforming peers as a weak yen continued to weigh on sentiment. The Japanese yen sank to 159.41 per dollar — perilously close to the psychologically critical 160 level — prompting Finance Minister Satsuki Katayama to repeat that authorities were prepared to take “all steps available” against volatile currency moves, according to Reuters.
BOJ Governor Kazuo Ueda told parliament on Tuesday that “underlying inflation is gradually accelerating towards our 2% target,” as reported by Reuters. The BOJ is widely expected to hold rates steady at 0.75% at its two-day policy meeting ending Thursday, but markets have priced in roughly a 70% chance of another hike in April.
Japan’s heavy reliance on Middle East energy — sourcing about 95% of its oil from the region with nearly 90% transiting the Strait of Hormuz — makes the economy especially vulnerable to the ongoing conflict. As Reuters’ analysis on the fading yen safe-haven aura detailed, the yen “is very exposed to oil prices” and “on a further oil shock it could readily break 160,” according to Steve Englander, global head of G10 FX research at Standard Chartered.
China: Shanghai & Shenzhen Retreat on Trade Uncertainty
Chinese markets bucked the regional trend, with the Shanghai Composite falling 0.85% to 4,049.91 and the Shenzhen Component dropping 1.87% to 14,039.73. Hong Kong’s Hang Seng managed a modest +0.24% gain to 25,895.47.
Sentiment was dampened by a Reuters report that Trump seeks to delay a planned meeting with China’s President Xi Jinping “by a month or so,” casting a pall over the U.S.-China trade truce at a time when global trade flows are already being disrupted by the Middle East conflict.
RBA Hikes Rates in a Knife-Edge 5-4 Decision
The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.1% — a 10-month high — in a tightly contested 5-4 vote on Tuesday. The hike undoes two of the three cuts made last year, as the RBA warned of “material” inflation risk from the ongoing Middle East war.
“The domestic data flow alone justified a rate hike today,” said Belinda Allen, head of Australian economics at Commonwealth Bank of Australia, as quoted by Reuters. “But new complications have arisen adding to the inflation challenge.”
Governor Bullock explained the split reflected timing rather than direction: “We had a very robust conversation over the past two days about whether we should hold until May… The board decided raising the cash rate was the right call.” Markets are now pricing in a 40% probability of another hike in May, with a move to 4.35% by August fully priced in.
The Australian dollar traded flat at around $0.7073 after the decision, while the ASX 200 rose 0.36% despite the tightening.
Oil, Commodities & Currencies
| Asset | Price | Change |
|---|---|---|
| Brent Crude | $103.53/bbl | +3.31% |
| WTI Crude | $97.10/bbl | +3.85% |
| Gold | $5,022.28/oz | +0.3% |
| USD/JPY | 159.18 | +0.08% |
| USD/CNY | 6.888 | -0.11% |
| AUD/USD | 0.706 | -0.11% |
| US 10Y Yield | 4.245% | +0.025 |
| JP 10Y Yield | 2.265% | -0.009 |
| Bitcoin | $74,073 | -0.2% |
Brent crude surged above $103 a barrel after several U.S. allies rebuffed Trump’s call to send warships to escort tankers through the Strait of Hormuz. Middle East oil exports have dropped at least 60% in the week to March 15 compared to February due to the disruptions, according to shipping data compiled by Reuters.
Iraq’s oil minister said Baghdad is in talks with Iran about allowing some oil tankers through the Strait, as Iraq seeks to ease disruptions to its crude exports.
Central Bank Week: What to Watch
This week features an extraordinary lineup of central bank decisions, all navigating the economic fallout from the Iran conflict:
- Federal Reserve (Wed): 99.1% probability of holding rates steady, per CME FedWatch. The FOMC “is likely to defer action until it becomes clear whether the output or price effects are dominant,” noted Steve Englander at Standard Chartered, as quoted by Reuters.
- Bank of Japan (Thu): Expected to hold at 0.75%. Governor Ueda’s inflation comments suggest the rate-hike path remains intact, though the war adds “immense uncertainty.”
- European Central Bank & Bank of England: Both widely expected to stand pat, though the war threatens to complicate their future rate paths.
- Bank Indonesia: Held rates steady on Tuesday, as expected.
The Bank for International Settlements on Monday urged policymakers not to rush reactions to the Iran-driven spike in global energy prices, calling it a “textbook case” of when to “look through” a supply shock.
Other Regional Highlights
- India: SENSEX gained 0.52% and NIFTY 50 rose 0.65%, though the rupee encountered headwinds near its all-time low. India’s February unemployment rate eased to 4.9% year-on-year.
- Taiwan: Expected to hold rates steady on strong economic growth, per a Reuters poll.
- Foxconn (Taiwan): Reported a 2% decline in fourth-quarter profit that lagged estimates, though it forecast strong revenue growth ahead.
Looking Ahead
The primary driver for Asian markets this week remains the interplay between the Middle East conflict, oil prices, and central bank reactions. With Brent crude above $100, the specter of 1970s-style stagflation looms over global markets. The Fed’s forward guidance on Wednesday will be critical in setting the tone for the rest of the week — and potentially for months to come.
Investors should keep a close eye on:
- Strait of Hormuz developments and oil supply disruptions
- Fed dot plot and updated economic projections (Wednesday)
- BOJ rate decision and any guidance on yen intervention (Thursday)
- U.S.-China summit timeline and trade truce durability
Sources: Reuters — Asia stocks attempt a rebound | Reuters — RBA hikes rates | Reuters — BOJ Ueda on inflation | Reuters — Yen safe-haven fading | CNBC Asia Markets | Reuters Asian Markets
All market data delayed at least 15 minutes. This article is for informational purposes only and does not constitute investment advice.
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