(Sharecast News) - Asia-Pacific markets traded mixed on Wednesday, breaking ranks with Wall Street after the S&P 500 closed at a fresh record.
The broad US index rose 0.41% to 6,978.60 overnight, supported by gains in Apple and Microsoft, but regional sentiment was more uneven, with strength in South Korea and Hong Kong offset by weakness elsewhere.
Patrick Munnelly, market strategy partner at TickMill, noted that "US stocks hit record highs on strong corporate earnings, while the dollar plunged to a near four-year low," adding that "the S&P 500 extended its five-session rally, nearing the 7,000 mark despite weaker consumer confidence."
Tokyo shares little changed as investors digest BoJ minutes
Japanese equities were little changed, with the Nikkei 225 edging up 0.05% to 53,358.71 as Furukawa Electric surged 11.71%, Fujikura climbed 9.25% and Renesas Electronics Corporation gained 8.33%.
The broader Topix fell 0.79% to 3,535.49.
Minutes from the Bank of Japan's December meeting showed policymakers weighing mounting inflationary pressures from a weak yen and labour shortages when considering the timing of further interest rate hikes, after raising the policy rate to a 30-year high of 0.75%.
Core inflation had exceeded the BoJ's 2% target for nearly four years, and markets had priced in roughly an 80% chance of a hike to 1% by April, with analysts expecting rates to reach 1% or higher by September.
The yen, which had slid near JPY 160 to the dollar earlier in January, had rallied around 3% over the past two sessions, amid speculation of US and Japan rate checks.
Munnelly said the foreign exchange landscape had shifted sharply, noting that "after a prolonged period of calm in the foreign exchange space, the currency market has been jolted awake by a surge in dollar selling," with "whispers that the US might intervene in currency markets to support Japan's yen" adding to volatility.
Mainland markets rise on mixed day for region
Chinese markets posted modest gains, with the Shanghai Composite rising 0.27% to 4,151.24 and the Shenzhen Component up 0.09% to 14,342.90.
Sichuan Hebang Biotechnology jumped 10.16%, Sinopec Oilfield Service advanced 10.11% and Zhongnongfa Seed Industry Group added 10.06%.
Hong Kong outperformed, with the Hang Seng Index surging 2.58% to 27,826.91, led by China Hongqiao Group up 7.31%, Pop Mart International Group up 7.03% and China Telecom up 6.27%.
The strength in Asian equities echoed Munnelly's observation that "global stocks are on their longest winning streak in a month, driven by Asian technology equities hitting record highs," with the MSCI All Country World Index rising 0.2% and nearing a record.
South Korean equities extended their rally, with the Kospi 100 climbing 1.87% to a record 5,823.67, marking a second straight session of all-time highs.
EcoPro Materials soared 15.3%, Hanmi Pharm rose 9.26% and SK Square gained 6.55%.
Sentiment was buoyed after US president Donald Trump struck a conciliatory tone on tariff threats against Seoul, reportedly saying, "We will work something out with South Korea."
Munnelly highlighted that markets remained highly sensitive to political messaging, saying "the financial markets are certainly paying attention to Donald Trump," adding that concerns over "Trump's economic policies, Washington's preference for a weaker exchange rate, and concerns about the Federal Reserve's independence" continue to shape investor positioning.
Australia, New Zealand in the red
Australian shares edged lower, with the S&P/ASX 200 down 0.09% at 8,933.90 as Life360 fell 7.61%, Temple & Webster Group dropped 6.62% and DroneShield declined 5.5%.
Data showed Australia's inflation rose to 3.6% year on year in the fourth quarter of 2025, the highest in six quarters and up from 3.2% in the third quarter, while quarterly inflation eased to 0.6% from 1.3%.
December inflation came in at 3.8%, above the 3.55% forecast, with housing prices rising 5.5% and food, non-alcoholic beverages, recreation and culture also contributing to price pressures, reinforcing expectations that interest rate cuts would be limited this year.
Globally, Munnelly said investors were reassessing the policy outlook, noting that "stocks rebounded from April lows due to lower interest rates and optimism around AI investments," though key tests remained ahead.
New Zealand markets were weaker, with the S&P/NZX 50 sliding 0.73% to 13,412.87.
Eroad fell 4.55%, Ebos Group dropped 2.44% and Kiwi Property Group declined 2.43%.
Dollar strengthens at oil prices ease
In currency markets, the dollar strengthened modestly, last trading up 0.29% on the yen at JPY 152.65, as it edged up 0.17% against the Aussie to AUD 1.4287 and advanced 0.22% on the Kiwi to change hands at 1.6577.
Oil prices eased, with Brent crude futures last down 0.3% on ICE at $67.37 per barrel, and the NYMEX quote for West Texas Intermediate off 0.21% at $62.26.
Munnelly warned that underlying risks for the dollar remained elevated, saying that "although there's been a slight recovery, the risks tied to holding dollars in the Trump era are becoming increasingly apparent," as investors also looked ahead to the Federal Reserve decision later in the day, which "is expected to see the committee hold rates steady at 3.5% to 3.75%," with chair Jerome Powell likely to face renewed political scrutiny at the press conference.
Reporting by Josh White for Sharecast.com.
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