The dominant macro driver overnight was a sharp surge in crude oil prices — Brent crude closing at $99.96/bbl (+6.26%) and WTI at $91.65/bbl (+5.55%) — as Middle East tensions stoked supply-disruption fears centred on the Strait of Hormuz. That move fed directly into the US Treasury complex, where the 2-year yield rose 5bp to 4.31% and the 10-year climbed 4bp to 4.67%, with the 30-year holding above 5.15%; the curve configuration signals that markets are repricing near-term inflation risk while the long end remains anchored by fiscal concerns rather than growth optimism. The VIX spiked 12.32% to 18.69, confirming a meaningful deterioration in risk appetite rather than a routine session drift, while gold — often the go-to inflation hedge — fell 2.31% to $4,051/oz as rising real yields competed for safe-haven flows.
For Asia-Pacific investors, the oil shock maps unevenly across the region. Japan is the most structurally exposed large importer: USD/JPY has pushed to 163.83 (+0.46%), a level last seen in the mid-1980s, meaning yen-denominated energy import costs are rising on both the commodity price and the currency leg simultaneously — a combination that complicates the Bank of Japan's inflation narrative ahead of the July 30–31 meeting. TOPIX Energy Resources and Steel & Metals sectors led the prior session's gainers (up 1.64% and 1.93% respectively), reflecting domestic pass-through dynamics rather than pure optimism. Korea, also a net energy importer, saw USD/KRW hold near 1,475.82, keeping import costs elevated even as the KOSPI gained 0.74% on semiconductor tailwinds. China's CSI 300 was the clear regional outlier, falling 3.60%, while the AUD/USD slipped to 0.697 despite Australian energy and materials sectors outperforming — a cross-asset divergence worth monitoring as iron ore at $98.38/t and coking coal at $221/t held relatively firm.