Asian Markets Tumble as BOJ Holds Rates, Oil Surges Past $110

Asian stock markets declined sharply on Thursday as a combination of a cautious Bank of Japan decision, soaring oil prices, and a hawkish U.S. Federal Reserve rattled investor confidence across the region.

Japan's Nikkei 225 led regional losses, plunging 2.6%, while the broader TOPIX index fell 2%. The selloff came after the Bank of Japan kept its short-term policy rate unchanged at 0.75%, citing mounting uncertainty over inflation driven by rising crude oil prices and escalating tensions in the Middle East. Given Japan's heavy dependence on energy imports, policymakers acknowledged that ongoing conflict in the region could significantly impact the country's inflation trajectory. Notably, BOJ board member Hajime Takata dissented, advocating for a 25 basis-point rate hike — a signal that internal pressure for tighter monetary policy is growing.

Other Asian markets followed suit. South Korea's KOSPI dropped 1.3%, Hong Kong's Hang Seng fell 1.5%, and both China's Shanghai Composite and CSI 300 declined around 1%. Singapore's Straits Times Index edged 0.5% lower.

Surging oil prices amplified the bearish mood, with Brent crude climbing above $110 per barrel following Iranian missile strikes on energy infrastructure across the Middle East, including significant damage to Qatar's Ras Laffan hub and intercepted attacks on Saudi Arabian facilities. The escalating conflict has stoked fears of prolonged supply disruptions through the Strait of Hormuz, a critical corridor for roughly one-fifth of global oil and LNG flows.

Adding to the pressure, Wall Street closed lower Wednesday after the Federal Reserve issued a hawkish rate hold, reinforcing expectations that U.S. interest rates will remain elevated. Australia's S&P/ASX 200 shed 1.5% following a rise in the national unemployment rate, while India's Nifty 50 futures bucked the trend, rising 0.4%.