Geopolitical tensions surrounding the Iran conflict and Strait of Hormuz disruptions dominated the macro backdrop into the weekend, pushing Brent crude up 4.59% to $88.10/bbl and WTI up 4.48% to $82.49/bbl while keeping inflation risk elevated. Central banks held a cautious tone — the ECB is widely expected to hold at its July 23 meeting with a 99% probability of no change, even as 2026 headline inflation is projected at 3.0%, and the BoE similarly remains on hold. Risk sentiment was mixed: resilient US data provided some support, but surging energy costs and slowing European growth forecasts of just 0.8% for 2026 weighed on appetite. The VIX spiked 12.19% to 18.77, signalling a meaningful step-up in near-term uncertainty heading into the new week.
For Asia-Pacific markets opening today, the signal is broadly cautious. The Nikkei 225 fell 4.03% on Friday with its VIX surging 14.22% to 36.86 — the sharpest volatility read across major markets — while KOSPI shed a severe 6.37%, the SSE dropped 3.05%, and the HKEX lost 1.78%, all reflecting a regional risk-off tone that the ASX 200 only partially absorbed with a 0.50% decline. Higher oil prices are a double-edged sword for Australia: they support energy exporters but add to domestic cost pressures, and with copper down 1.21% and the commodity complex mixed, resources-heavy ASX names face a nuanced open. The ASX VIX, while more contained at 11.58 (up 3.67%), still confirms that local traders are beginning to price in the global unease.