MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.12%, hovering near the record high it hit on Monday

Asian stocks held near record highs as investors weighed the geopolitical situation in the Middle East and braced for megacap earnings and a slew of central bank meetings, with the Bank of Japan due later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.12%, hovering near the record high it hit on Monday. The index is on course for a 17% rise in April after declining 13.5% in March.

Nikkei was down 0.5% after scaling a new record high in the previous session. The S&P 500 eked out modest gains on Monday, poised for around 10% gain for the month.

Global monetary policy will be in the spotlight this week as the BOJ, among others, is due to announce policy decisions.

The BOJ is widely expected to hold off raising interest rates on Tuesday, but drop hawkish signals to leave itself scope to push up borrowing costs in coming months to counter inflationary pressure from the Middle East war.

Markets are focusing on the BOJ’s quarterly outlook report and comments from Governor Kazuo Ueda for clues on how the protracted Iran war affects its rate-hike path.

The yen was at 159.33 per U.S. dollar, still near the 160 level that traders have been worried about as a breach beyond it might spur Tokyo to step in to support the currency.

The BOJ is likely to stay highly sensitive to market volatility, said Fred Neumann, chief Asia economist at HSBC. Our base case remains one single 25 basis point hike this year in July, but a June rate rise becomes more likely if the Strait of Hormuz is still effectively closed after mid-May.

Brent crude futures edged up to $108.13 a barrel, near a three-week high.