S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
MUFG analysts Lin Li, Michael Wan, Lloyd Chan and Khang Sek Lee highlight that Asian currencies and rates are vulnerable as the Iran conflict threatens Oil supply via the Strait of Hormuz. They stress Asia’s heavy dependence on Middle East energy imports and warn that potential energy shortages and supply chain disruptions could worsen regional growth and inflation risks.
Asian FX exposed to energy shock
“Markets remain focused on developments in the Iran conflict and the spillover impact to oil prices and to Asian FX and rates.”
“Overall, Asia stands out as one of the most negatively impacted regions from disruptions from the Strait of Hormuz, with 90% of the oil through the Strait going to our region.”
“Meanwhile, Asia imports close to 60% of its crude oil, 22% of its refined petroleum, 20% of its natural gas, and more than 40% of other gases such as LPG from the Middle East.”
“Overall, it is not just about oil prices, but about potential energy shortages and possible indirect spillover impact from supply chain disruptions which raises the left tail risks for Asia’s growth and inflation moving forward from this crisis.”
“Looking forward, next week is dominated by G10 and Asia central banks alike grappling with the inflationary implications of the recent energy shock, even as domestic growth momentum remains uneven.”
