Asia report: Markets mixed as US strikes Iran again

(Sharecast News) - Asia-Pacific markets were mixed on Monday as oil prices fluctuated and US Treasury yields climbed following the latest military exchanges between the US and Iran.

The US completed a ninth consecutive day of strikes overnight, although sentiment improved after Iranian Foreign Ministry spokesman Esmail Baghaei said intermediaries were continuing to exchange messages and negotiations could be pursued based on national interests.

Japanese markets were closed for the Marine Day holiday.

"Markets are starting the week with crude as the macro driver," said Patrick Munnelly, market strategy partner at TickMill.

"Brent's break above $90 per barrel has turned the US-Iran escalation from a geopolitical tail risk into the dominant macro input again, pressuring bonds, reviving inflation concerns and limiting the comfort investors can take from last week's softer US CPI and PPI prints.

"Equities are trying to stabilise after Friday's tech-led rout, but the message from rates and oil is less forgiving: the disinflation trade now has to survive a fresh energy shock."

Equity markets diverge across the region

China's Shanghai Composite rose 0.85% to 3,796.28, with Guizhou Chitianhua up 10.13%, Inner Mongolia MengDian HuaNeng Thermal Power gaining 10.09% and Datang HuaYin Electric Power advancing 10.07%.

The Shenzhen Composite fell 0.71% to 13,610.23.

The People's Bank of China left its key lending rates at record lows for a 14th consecutive month, as expected, holding the one-year loan prime rate at 3.0% and the five-year rate at 3.5%.

The decision came after second-quarter GDP growth slowed to its weakest since the fourth quarter of 2022, while higher energy prices, supply-chain disruption and continued weakness in the property market weighed on the economy.

Yuan lending increased from May but grew slower than a year earlier, while exports remained supported by AI-related demand.

Hong Kong's Hang Seng Index jumped 2.36% to 25,143.05.

CNOOC gained 5.19%, CSPC Pharmaceutical Group rose 4.94% and China Resources Power advanced 4.79%.

South Korea's Kospi 100 plunged 4.43% to 8,082.54, with Samsung Fire & Marine Insurance down 14.12%, LG Innotek falling 9.88% and Hyosung Heavy Industries losing 8.96%.

Australia's S&P/ASX 200 edged down 0.06% to 8,791.30 as PEXA Group fell 4.94%, Liontown Resources declined 4.14% and Mineral Resources dropped 3.86%.

"Broader Asian equities were little changed, suggesting markets are no longer in full liquidation mode, but the stabilisation is fragile," Munnelly added.

"The semiconductor trade has shifted from 'buy the theme' to 'prove the earnings'.

"That is the key equity tension for the week.

"Oil is tightening financial conditions from the macro side, while AI is facing a valuation and competitive challenge from the micro side.

"Either one would be manageable alone. Together, they create a more difficult backdrop for duration-sensitive growth stocks."

New Zealand's S&P/NZX 50 rose 0.01% to 13,696.03.

Skycity Entertainment Group gained 3.51%, Precinct Properties added 2.84% and Air New Zealand advanced 2.41%.

The country's trade surplus narrowed to NZD 0.02bn in June from NZD 0.2bn a year earlier, below forecasts of NZD 0.25bn, as exports rose 25% to NZD 8.1bn and imports increased 28% to NZD 8.1bn.

Dollar mixed as oil prices slip back

In currency markets, the dollar was last up 0.01% on the yen to trade at JPY 162.42, as it fell 0.2% against the Aussie to AUD 1.4290 and declined 0.14% on the Kiwi to change hands at NZD 1.7092.

Brent crude futures slipped 0.56% on ICE to $87.61 per barrel, while the NYMEX quote for West Texas Intermediate fell 1.07% to $81.61.

Reporting by Josh White for Sharecast.com.