Asian shares waver as oil and yields rise ahead of Fed, BOJ meetings

Asian markets wavered on Tuesday as investors grappled with Middle East tensions, calls for a slowdown in AI development, and rising oil prices and bond yields heading into key meetings by the Federal Reserve and the Bank of Japan. Yemen's Iran-aligned Houthis launched a fresh assault on Saudi Arabia, and Gulf Arab states halted anticipated talks with Tehran.

Oil prices surged 1.27% to $102.68 a barrel for US crude and 1.21% to $106.96 a barrel for Brent. Market analysts warned that higher crude prices could fuel inflation and potentially trigger rate hikes. MSCI's Asia-Pacific shares index outside Japan fell 0.12%, while Japan's Nikkei edged 0.19% higher after an early slump. South Korean shares recovered from earlier losses, buoyed by bargain-hunting in chip stocks after a three-day slump.

The Federal Open Market Committee convened for a two-day meeting, with markets betting on a 90% probability of a rate increase, the Fed's first since mid-2023. Japan's central bank was expected to raise rates by 25 basis points at the meeting's end, aiming to bolster the yen following an intervention that lifted the currency away from a 40-year low. Against the yen, the dollar rose 0.17% to 154.61, and gold and silver prices edged lower.