Asia Equities Make Cautious Gains Ahead of Fed, Oil Retreats But Stays High

By Ronnie Harui

Asian equity markets advanced broadly early Wednesday after a positive lead from Wall Street overnight, while oil retreated but stayed high as the conflict in the Middle East continued.

Chip-makers and tech-related stocks again boosted markets in morning trade, with Japan's Nikkei Stock Average up 2.2% and South Korea's Kospi up by 3.5%.

Chinese stocks got off to a shakier start, with the Shanghai Composite Index down 0.3% but the tech-heavy ChiNext Index up 0.5%. Hong Kong's Hang Seng Index was virtually flat after opening 0.1% higher.

How long any positive momentum lasts is unclear as focus shifts to the Federal Reserve's decision later.

Markets have continued to trade with a "constructive tone," though gains have been modest ahead of the FOMC meeting, said Sally Auld, group chief economist at National Australia Bank.

With the U.S. central bank widely expected to leave the target range for the federal funds rate unchanged at 3.50% to 3.75%, attention will be on any forward guidance and comments on the impact of the Middle East conflict.

"Focus will be on shifts in the dot plot in the accompanying Summary of Economic Projections and on Chairman [Jerome] Powell's assessment of the geopolitical situation," the InTouch Capital Markets team said in a commentary.

"Since markets are no longer certain on pricing for another interest rate cut this year, the question may be the extent to which the Fed validates this shift in the wake of the energy price shock," they added.

Oil pulled back after closing above the $100-barrel mark again overnight, as traders weigh morning headlines about U.S. strikes near the Strait of Hormuz, and news of Iraq being in talks with Iran to secure passage of some of its oil tankers through the key shipping lane.

"The U.S.-Iran conflict has entered its third week with no credible path to de‐escalation," OCBC Group Research's Sim Moh Siong said in a note.

Brent prices are likely to stay around $100 a barrel through mid-2026, the commodity strategist said, as flows through the strait remain severely constrained, and no U.S. partners committed to President Trump's call for joint military action to reopen the channel.

Front-month WTI futures are 1.5% lower at $94.75 a barrel; front-month Brent futures are 1.0% lower at $102.39 a barrel.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

March 17, 2026 22:51 ET (02:51 GMT)