Global markets fall as rate hike fears rise, oil prices recover

Global financial markets came under pressure on Tuesday as investors reacted to growing expectations that the United States Federal Reserve may continue tightening monetary policy to combat inflation.

Global financial markets came under pressure on Tuesday as investors reacted to growing expectations that the United States Federal Reserve may continue tightening monetary policy to combat inflation. The cautious sentiment weighed on stock markets across Asia and Wall Street, while oil prices managed to recover after recent losses.

Asian equities traded mostly lower during the session, reflecting concerns over the outlook for interest rates and global economic growth. The broad MSCI Asia-Pacific Index excluding Japan slipped by 0.5 percent, indicating widespread weakness across regional markets.

Japan’s benchmark Nikkei 225 index declined by 0.6 percent, while South Korea’s KOSPI index recorded a sharper drop of 2 percent amid heavy selling in technology and export-related shares. In contrast, Taiwan’s stock market outperformed regional peers, gaining 0.9 percent and reaching a fresh record high.

The subdued performance followed a negative session on Wall Street, where major U.S. stock indexes ended lower. Technology stocks led the decline as investors reassessed the possibility of additional interest rate increases by the Federal Reserve.

Market participants are increasingly betting that the U.S. central bank will maintain a firm stance against inflation. Current market pricing suggests a 54 percent probability that the Federal Reserve could implement at least two additional rate hikes before the end of the year. Higher borrowing costs typically reduce investor appetite for riskier assets and can slow economic activity.

Meanwhile, oil prices staged a modest recovery after experiencing significant losses in the previous trading session. Brent crude, the international benchmark for oil prices, rose 0.2 percent to trade at $78.03 per barrel.

The rebound came as concerns over potential supply disruptions eased. Market participants took note of Washington’s decision to grant a temporary 60-day sanctions waiver related to Iran, while the reopening of the strategically important Strait of Hormuz helped calm fears about disruptions to global energy shipments.

Currency markets also remained in focus. The Japanese yen continued to hover near its weakest level against the U.S. dollar in approximately four decades, highlighting ongoing pressure on Japan’s currency. Japanese Finance Minister Satsuki Katayama reportedly held discussions with U.S. Treasury Secretary Scott Bessent as authorities monitored heightened volatility in foreign exchange markets.

The U.S. dollar remained broadly strong, with the dollar index—measuring the greenback against a basket of major global currencies—trading at 101.04, close to its highest level since May of last year. The stronger dollar has added pressure on commodities and emerging-market currencies.

In precious metals and digital assets, sentiment remained subdued. Gold prices edged lower, while leading cryptocurrencies such as Bitcoin and Ether also recorded modest declines as investors favored safer positions amid uncertainty surrounding monetary policy and global growth prospects.