Asian stock markets fell sharply on Monday as renewed geopolitical tensions between the US and Iran pushed oil prices near 0 per barrel, undermining expectations of aggressive central bank rate cuts. The benchmark Brent crude futures climbed to .85, marking a 2.3% increase, while regional indices like the Nikkei 225 and Hang Seng dropped over 1.5%. Analysts attributed the decline to heightened fears of supply disruptions and inflationary pressures, which could delay monetary easing plans by the Federal Reserve and other central banks. The market reaction highlights the fragility of investor confidence amid overlapping risks: geopolitical instability, stubborn inflation, and delayed policy normalization. Traders are recalibrating their portfolios to hedge against energy price volatility, with reduced bets on rate cuts in 2024. This shift is particularly impactful for equity markets, where lower discount rates had previously fueled growth stock valuations. The dollar index strengthened to 103.5 as investors sought safe-haven assets amid uncertainty. For global markets, the key focus now shifts to OPEC+ supply decisions and potential US-Iran de-escalation efforts. Gulf investors should monitor regional oil export dynamics and how sustained high prices affect domestic inflation. Central bank policy statements in the coming weeks will also determine whether rate-cut expectations can rebound. Energy-linked assets and USD pairs are likely to remain volatile in the near term.

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