(Sharecast News) - Asia-Pacific equities traded mixed on Thursday, as renewed US-China trade tensions and central bank decisions weighed on sentiment, while energy prices surged sharply.
"Asian markets took a hit, and gold faltered, as a week that started with positive risk sentiment shifted to concerns over corporate earnings and escalating trade tensions," said Patrick Munnelly, market strategy partner at TickMill.
"Following a shaky session on Wall Street, Asian stocks retreated, with gold pulling back from its record highs.
"Investors were left grappling with renewed fears of trade conflicts and a mixed bag of corporate earnings reports."
Kospi erases gains as most markets close lower
South Korea's Kospi index erased earlier gains to close 0.98% lower at 3,845.56, retreating from a record high after the Bank of Korea left its benchmark rate unchanged at 2.5%, as expected.
Losses were led by Sewon E&C, which plunged 37.61%, while Hwaseung Corporation and Dayou A-Tech fell 8.18% and 7.42%, respectively.
The decision followed a global risk-off tone after Wall Street declined overnight on fears of new US export curbs to China.
"The Trump administration's proposal to impose new restrictions on software exports to China reignited concerns of further trade disputes," Munnelly noted, adding that "investor anxiety was fuelled by both global and regional factors."
Japan's Nikkei 225 dropped 1.35% to 48,641.56 and the broader Topix lost 0.39% to 3,253.78.
Technology and investment stocks led declines, with Renesas Electronics down 5.59%, Sumco Corporation 5.22% lower, and SoftBank Group sliding 4.66%.
SoftBank pared earlier losses after announcing plans to issue $2bn in US-dollar bonds and 750m in hybrid notes, carrying interest rates between 6.5% and 8.25%, to support its artificial intelligence investments.
Mainland Chinese markets bucked the regional trend, with the Shanghai Composite rising 0.22% to 3,922.41 and the Shenzhen Component also up 0.22% at 13,025.45.
Resource and energy firms, including Qinhuangdao Port, Shaanxi Heimao Coking and ShanXi Coking, all climbed over 10% to lead gains.
Hong Kong's Hang Seng Index gained 0.72% to 25,967.98, supported by strength in consumer and leisure shares, with Li Ning up 6.55%, China Hongqiao Group 4.48% higher, and Sands China advancing 4.4%.
"In China, officials were wrapping up the Fourth Plenary in Beijing, with a key policy announcement expected later in the day," Munnelly added, noting that "US Treasury secretary Scott Bessent is set to meet with Chinese officials this weekend ahead of the much-anticipated Trump-Xi summit."
Australia's S&P/ASX 200 edged up 0.03% to 9,032.80, lifted by miners and energy producers.
Pilbara Minerals climbed 5.34%, Regis Resources rose 4.52%, and Woodside Energy gained 4.32%.
Across the Tasman Sea, New Zealand's S&P/NZX 50 advanced 0.53% to 13,377.10, led by Vista Group International, Eroad, and KMD Brands, which added 7.03%, 6.63%, and 5.08% respectively.
In currency markets, the dollar strengthened 0.38% against the yen to JPY 152.55, while it weakened 0.31% versus the Australian dollar to AUD 1.5365 and 0.13% against the New Zealand dollar to NZD 1.7399.
"The yen weakened for a fifth consecutive session against the US dollar, while 10-year Treasury yields remained steady around 3.95% following a strong $13bn auction of 20-year bonds," said Munnelly.
"Meanwhile, the dollar index edged up by 0.1%."
Oil prices surged, with Brent crude futures last up 5.11% on ICE at $65.79 per barrel, and the NYMEX quote for West Texas Intermediate climbing 5.25% to $61.57, extending gains amid renewed geopolitical tensions and supply concerns.
"Oil prices surged by about 3% after the US imposed sanctions on Russia's largest energy producers in a bid to pressure president Vladimir Putin toward peace talks over the Ukraine conflict," Munnelly observed.
Bank of Korea stands pat on rates
The Bank of Korea held its benchmark interest rate steady at 2.5% on Thursday, maintaining a cautious stance as it balances financial stability risks against pressures for further monetary easing.
The decision, expected by most economists surveyed by Bloomberg, extended a pause that began in July following four rate cuts since October last year.
Policymakers were constrained by a renewed surge in Seoul's property market and mounting household debt, which risk destabilising the financial system if borrowing costs were reduced further.
Apartment prices in the capital had risen for 37 consecutive weeks despite repeated government measures to cool demand.
Governor Rhee Chang-yong said in August that a majority of board members were open to easing by year-end, but the bank reiterated it would only do so once housing-related risks show clearer signs of stabilising.
Analysts said any divergence from the US Federal Reserve's policy stance could add volatility to the won, limiting the bank's room to manoeuvre.
Recent data underscored the central bank's dilemma - household credit growth slowed to 2% last month, the weakest since March, but mortgage lending rose 2.5%.
To address the imbalance, the government last week introduced tighter mortgage limits, expanded regulated housing zones, and accelerated plans to raise risk weights on banks' home loans.
Officials said the measures aim to divert credit away from real estate and curb speculative activity.
Inflation remained contained, with consumer prices rising 2.1% in September and core inflation steady at 2%, near the Bank of Korea's target.
The moderate price outlook offered scope for policy flexibility if financial risks ease.
Meanwhile, external headwinds persist as US tariffs begin to weigh on key exports such as automobiles.
The BOK estimated trade measures would shave 0.45 percentage points off growth this year and 0.6 points in 2026.
It said it expected GDP growth of 0.9% in 2025, broadly in line with the IMF's latest forecast.
Reporting by Josh White for Sharecast.com.
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