SYDNEY (REUTERS)

Asian markets were in a wary mood on Monday as oil prices remained elevated, clouding an inflation outlook ​that should keep most central banks on pause at policy meetings this week, and probably leading one to hike.

Oil markets saw Brent rise 1.5% to $104.72 a barrel, while US crude gained 0.9% to $99.60.

Japan's Nikkei dipped ‌0.3%, while South Korean stocks added 0.7% after both lost ground last week. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%.

Chinese blue chips eased 0.5% as data showed retail sales and industrial output for January and February topped forecasts, while house prices continued to slip. Top US and Chinese officials are also meeting in Paris to discuss potential deals in agriculture, critical minerals and managed trade for Trump and Chinese President Xi Jinping to consider when the US president visits Beijing.

Central Banks

For Europe, EUROSTOXX 50 futures, DAX futures and FTSE futures all added 0.4%.

S&P 500 futures and Nasdaq futures bounced 0.5% in choppy trading. While earnings season is over, concerns about AI will be front and center as Nvidia hosts its GTC conference at Silicon Valley this week, where it is expected to show off the latest advances in chips and AI infrastructure.

The coming energy shock, combined with ​pressure on fiscal budgets from higher defence spending, saw double-digit increases in bond yields globally last week.
Ten-year Treasury yields were at 4.261%, having climbed 32 basis points since the war began, while futures have sharply scaled back the scope for future rate cuts.

The Federal Reserve is considered certain to hold on Wednesday and the chance of an easing by June has come down to just ​26%, from 69% a month ago.

Investor attention will be on the tone ‌of ⁠the statement and press conference, and whether ‌the median “dot plot” projections from policymakers remove any further easing for this year. A cautiously steady outcome is expected at the other central bank meetings, bar the Reserve Bank of Australia which is seen likely to raise its cash rate a quarter point to 4.1% as it battles resurgent inflation at ⁠home.

The heightened volatility in markets has tended to benefit the US dollar as a store of liquidity. The United States is also a net energy exporter, giving it a relative advantage over Europe and much of Asia, which are net importers.

The dollar was trading a touch lower early on Monday. It eased to 159.58 yen, just off a 20-month top of 159.75.

The euro was stuck near a seven-month low at $1.1445, threatening a breach of major chart support at $1.1392 that could unleash a retreat towards $1.1065.

In commodity markets, gold was little changed at $5,022 an ounce, having so far seen scant support as ​a safe haven or as a hedge against inflation risks.