Asian Equities Gain, Oil Retreats Ahead of Fed

Japan's Nikkei Stock Average rose 2.2%, and South Korea's Kospi gained 3.5%. Chinese markets showed mixed results, with the Shanghai Composite down 0.3% and the ChiNext Index up 0.5%, while Hong Kong's Hang Seng remained largely flat.

This positive momentum is tempered by anticipation of the Federal Reserve's decision later today. The Fed is widely expected to keep the federal funds rate unchanged at 3.50% to 3.75%, shifting investor focus to forward guidance, potential shifts in the dot plot, and Chairman Powell's assessment of the Middle East conflict's economic impact.

Markets are now less certain about further rate cuts this year, influenced by recent energy price shocks. Concurrently, oil prices pulled back after closing above $100 a barrel.

Front-month WTI futures fell 1.5% to $94.75, and Brent futures dropped 1.0% to $102.39. This retreat follows news of U.S. strikes near the Strait of Hormuz and Iraq's talks with Iran regarding oil tanker passage.

Analysts project Brent prices to remain around $100 a barrel through mid-2026, citing persistent constraints on Strait flows and the lack of de-escalation in the U.S.-Iran conflict.