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Tuesday, March 31, 2026
What’s happening: Japan’s stock markets edged lower this morning as investors continued monitoring the latest developments in the ongoing Middle East conflict.
What happened: Investor sentiment was hit after Iran attacked a Kuwaiti oil tanker at the Dubai Port, causing fire on board the ship.
Investors also responded to economic reports from Japan released this morning.
Why it matters: The ongoing Middle East conflict has now entered its fifth week with no signs of easing. Iran has effectively closed the Strait of Hormuz route, a channel for around 20% of the world’s total oil and gas supplies, while warning of disruptions in the Red Sea route.
Tensions grew over the weekend after Iran-backed Houthi militants announced their first attack on Israel. Meanwhile, US President Trump has extended the deadline for strikes against Iran’s energy infrastructure into April, with Iran indicating that it would not come to the negotiating table amid ultimatums.
Iran struck a Kuwaiti oil tanker, Al Salmi, near a Dubai port, raising shipping concerns in the Persian Gulf and restricting access to Middle East energy. Kuwait Petroleum Corporation said the tanker was fully loaded at the time of the incident and warned of a possible oil spill.
Data released this morning showed retail sales in Japan declined 0.2% year-over-year in February following 1.8% growth in the previous month. The figure also came in below market estimates of 0.8% growth. The latest reading signalled higher concerns from rising costs despite fiscal support from Japan.
Core consumer prices in Tokyo’s central wards grew by 1.7% year-over-year in March, following a 1.8% surge in the previous month. The latest reading signalled the smallest gain since April 2024.
Japan’s industrial production fell 2.1% in February, recording the first decline since November 2025. Japan’s unemployment rate fell to 2.6% in February from January’s 2.7%, as the number of unemployed declined by 60,000 to 1.85 million.
Japan’s Nikkei 225 fell 1.23% to 51,245.17 this morning. Tech stocks were among the biggest losers, with shares of Disco Corp, Lasertec and SoftBank Group trading lower.
What to watch: Investors will keep an eye on the developments around the ongoing conflict in the Middle East.
Data on Tankan large manufacturers index (0350 UAE Time), Tankan large non-manufacturing index (0350 UAE Time) and S&P Global manufacturing PMI (0430 UAE Time) from Japan will be released today. The Bank of Japan’s sentiment index for large manufacturers, which rose to 15 in the fourth quarter from 14 in the previous month, is expected to rise further to 16 in the first quarter. Analysts expect non-manufacturing PMI in Japan to decline to 33 in the first quarter from 34 points in the fourth quarter, while the S&P Global manufacturing PMI is expected to decline to 51.4 in March from a four-year high of 53.0 in the previous month.
Context: The AUD/USD forex pair gained this morning as investors digested the latest economic data.
Details: Data released this morning showed Australia’s private sector credit surged 0.6% in February, up from a 10-month low of 0.5% in January, and in-line with market estimates. The latest growth in credit signalled higher lending activity across the major segments of the economy.
While personal credit and business credit grew, housing credit remained at 0.6% in February, unchanged from the previous month.
The Reserve Bank of Australia’s minutes from the recent meeting showed inflation in the region remains elevated. Rising crude oil prices due to the Middle East conflict were flagged as the main driver of this near-term inflation. Policymakers said that headline CPI could surge to around 5% in the June quarter even if crude oil prices hold around $100 per barrel.
Weakness in the US dollar lent support to the AUD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 100.39 this morning.
The AUD/USD pair gained more than 0.1% to 0.6861 this morning, while the S&P/ASX 200 surged around 0.8% to 8,526.10.
What to watch: Investors await the release of data on Australia’s S&P Global manufacturing PMI (0200 UAE Time), building permits (0430 UAE Time) and private house approvals (0430 UAE Time) on Wednesday.
Analysts expect the S&P Global Australia manufacturing PMI to decline to 50.1 in March from 51.0 in the previous month. The number of total dwellings approved in Australia, which tumbled 7.2% to a 19-month low of 14,564 units in January, is expected to rise by 6.2% in February. Private house approvals, which surged by 1.1% to 9,753 units in January, are expected to rise by 0.3% in February.
Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.61%, 1.18%, 0.92% and 0.94%, respectively.
Ukraine hit a chemical plant in Russia’s Samara oblast. The news sent the USD/RUB pair higher in forex trading this morning.
Singapore’s bank loans surged to a fresh record high of S$893.6 billion in February from S$ 887.5 billion in the previous month, exerting pressure on the USD/SGD forex pair.
China’s NBS composite PMI output index climbed to 50.5 in March from 49.5 in February. The latest reading being the highest since December 2025 sent the USD/CNY pair lower in forex trading this morning.
South Korea’s retail sales grew by 2.9% in February, unchanged from the previous month’s growth, lending support to the USD/KRW forex pair.
UK’s shop price inflation grew by 1.2% year-over-year in March, accelerating from 1.1% in the previous month. The latest reading coming in below market estimates of 1.3% lent support to the GBP/USD pair in forex trading this morning.
Spain’s current account (1200 UAE Time), Eurozone’s inflation rate (1300 UAE Time), Italy’s inflation rate (1300 UAE Time) and industrial sales (1400 UAE Time), South Africa’s balance of trade (1600 UAE Time), Brazil’s nominal budget balance (1530 UAE Time) and PPI (1600 UAE Time), Canada’s GDP (1630 UAE Time), as well as US Redbook index (1655 UAE Time), S&P/Case-Shiller home price index (1700 UAE Time), FHFA house price index (1700 UAE Time), Chicago PMI (1745 UAE Time), JOLTs job openings (1800 UAE Time), CB consumer confidence (1800 UAE Time), JOLTs job quits (1800 UAE Time), Dallas Fed services index (1830 UAE Time) and Dallas Fed services revenues index (1830 UAE Time).
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