In summary:

Middle East tensions persist with missile and drone exchanges across the region
Saudi, Kuwait and Bahrain air defences activated against Iranian attacks
“Boots on the ground” timeline seen at least three weeks away
Oil prices eased despite ongoing conflict and supply risks
Saudi officials warn oil could surge toward $180 if disruptions persist
Gold rebounds above $4,730 amid geopolitical uncertainty
PBOC leaves Loan Prime Rates unchanged for tenth straight month
USD/JPY rises toward 158.30 despite quiet session and Japan holiday
Major FX pairs soften, with EUR/USD and GBP/USD lower
Tesla in talks for $2.9B solar equipment deal with Chinese suppliers

Geopolitical tensions in the Middle East remained elevated, with Iran launching a fresh barrage of missiles toward Israel, while Israeli forces reportedly targeted Iranian regime infrastructure in Tehran. Regional spillover risks were evident, with Saudi Arabia confirming its air defences intercepted multiple drones in the Eastern Province, while Kuwait and Bahrain also activated systems in response to incoming threats.

Speculation around potential ground operations continued to circulate, with timelines suggesting any “boots on the ground” scenario remains at least several weeks away, and, once initiated, unlikely to be reversed.

Despite the escalation, oil prices eased during the session, before recovering. The down move followed remarks from Israeli officials indicating that strikes on Iran’s South Pars gas field are unlikely to be repeated, alongside comments from Prime Minister Netanyahu suggesting the conflict may conclude sooner than expected. That said, underlying risks remain elevated. Separate reporting indicated Saudi officials see a scenario where oil prices could surge toward $180 per barrel if disruptions to supply persist into late April.

Gold prices moved higher, reclaiming levels above $4,730.

In China, the People’s Bank of China left its Loan Prime Rates unchanged for a tenth consecutive month, with the one-year rate at 3.0% and the five-year at 3.5%. The central bank continues to guide policy primarily through its 7-day reverse repo rate, currently at 1.4%, which serves as the key benchmark for liquidity conditions and broader lending rates.

Japanese markets were closed for a public holiday, removing a key source of liquidity from the region and limiting activity in physical U.S. Treasuries. In FX, USD/JPY advanced toward 158.30 in a relatively quiet session, while EUR/USD and GBP/USD edged lower.

In corporate developments, Tesla is reportedly in talks to purchase around $2.9 billion worth of solar manufacturing equipment from Chinese suppliers, including Suzhou Maxwell Technologies, as part of plans to significantly expand U.S.-based solar capacity.

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