Asia markets set to track Wall Street losses as Iran war fuels energy worries; BOJ rate decision on deck

Asia-Pacific markets were set to open lower Thursday, tracking losses on Wall Street that saw the Dow Jones Industrial Average touch a new closing low for the year.

The Federal Reserve held its key policy rate steady at 3.5% to 3.75%, with Chair Jerome Powell watering down rate-cut expectations, saying that inflation was not coming down as much as ‘hoped.’

The producer price index — which tracks the change in wholesale prices — rose 0.7% in February, well above the 0.3% that economists polled by Dow Jones had estimated.

Despite that, the U.S. central bank's "dot plot" still projects a cut in 2026 and another in 2027, even though the timing is unclear.

Iran war continues to fuel energy worries. International benchmark Brent crude futures rose 3.83% to settle at $107.38 per barrel. U.S. oil prices were trading at elevated levels as well, with West Texas Intermediate futures closing marginally higher at $96.32 per barrel.

Investors in Asia will look toward the Bank of Japan decision, with the bank expected to hold rates at 0.75%.

Australia's S&P/ASX 200 started the day down 1.56%.

Japan's Nikkei 225 futures pointed to a weaker open for the market, with the futures contract in Chicago at 53,675 and its counterpart in Osaka at 53,280 compared to the index's previous close of 55,239.4.

Hong Kong's Hang Seng index futures were at 25,479, lower than the HSI's last close of 26,025.42.

Overnight in the U.S., the 30 stock Dow  lost 1.63%, ending at 46,225.15, reaching a new low this year, the also closed below its 200-day moving average.

The S&P 500 fell 1.36%, while the Nasdaq Composite dropped 1.46%.

—CNBC's Sean Conlon, Pia Singh and Jeff Cox contributed to this report.