(Sharecast News) - Asia-Pacific markets ended Friday on a mixed note as investors digested China's decision to leave its benchmark lending rates unchanged and continued to monitor rising geopolitical risks stemming from tensions between Israel and Iran.
The decision from Beijing followed recent monetary easing, and came amid signs of stabilising US-China trade relations.
"European equity futures climbed, while the dollar weakened after the White House announced that president Donald Trump would decide within two weeks whether the US would collaborate with Israel in launching strikes against Iran," said TickMill market strategy partner Patrick Munnelly.
"The regional MSCI index advanced by 0.5%, with stock markets in South Korea, Hong Kong, and China showing positive performance.
"Meanwhile, S&P 500 futures fell about 0.2% from Wednesday's close during the Asian session, compared to a sharper 0.9% drop on Thursday when US markets were closed for the Juneteenth holiday."
Munnelly noted that Treasury yields held steady, while the dollar index was on track for a second consecutive day of losses.
"Traders grew increasingly cautious following reports that senior US officials were preparing for a potential strike on Iran in the near future.
"Market sentiment was already fragile after the Federal Reserve downgraded its growth forecasts for the year and signalled rising inflation pressures.
"Adding to tensions, Israel escalated attacks on Iran's nuclear facilities on Thursday, warning that its actions could destabilise Tehran's leadership."
Markets end turbulent week in a mixed state
In Japan, the Nikkei 225 slipped 0.22% to close at 38,403.23, with losses led by Nintendo, down 4.11%, DeNA, off 3.62%, and Japan Steel Works, which fell 3.32%.
The broader Topix index declined 0.75% to 2,771.26.
Mainland Chinese equities also drifted lower - the Shanghai Composite edged down 0.07% to 3,359.90, while the Shenzhen Component dropped 0.47% to 10,005.03.
Losses were sharp among small-cap and speculative names, including Time Publishing and Media and Qinghai Jinrui Mineral Development, both down 10%, and Nanhua Futures, which fell 9.98%.
In contrast, Hong Kong's Hang Seng Index gained 1.26% to 23,530.48, led by strong gains in consumer and tech stocks.
Li Ning Co rose 4.8%, China Life Insurance added 4.74%, and Sunny Optical Technology advanced 3.99%.
South Korea's Kospi 100 outperformed the region, surging 1.6% to 3,029.46.
Shares of KakaoPay soared 29.85% after upbeat earnings, while KakaoBank and SK Bioscience climbed 14.06% and 13.87% respectively.
Australia's S&P/ASX 200 lost 0.21% to 8,505.50 amid steep losses in the mining sector.
Mineral Resources fell 6.17%, Pilbara Minerals lost 5.02%, and Platinum Asset Management declined 4.12%.
Markets in New Zealand were closed for the Matariki public holiday.
In currencies, the dollar weakened slightly across the board. slipping 0.08% on the yen to trade at JPY 145.34, while it lost 0.07% against the Aussie to AUD 1.5417 and retreated 0.05% from the Kiwi, changing hands at NZD 1.6677.
Oil prices were mixed, with Brent crude futures last down 2.22% on ICE at $77.10 per barrel, while the NYMEX quote for West Texas Intermediate rose 0.69% to $75.66.
China holds rates, South Korea inflation slows, Japan rice prices soar
In economic news, China left its benchmark lending rates unchanged on Friday, as the central bank signalled a pause following last month's monetary easing.
The People's Bank of China held the one-year loan prime rate at 3.0% and the five-year rate at 3.5%, in line with market expectations.
It came after a 10-basis-point cut - the first since October - aimed at offsetting trade-related headwinds.
The rates are set monthly based on submissions from commercial banks and serve as key benchmarks for business and household borrowing, particularly mortgages.
In South Korea, wholesale inflation eased sharply, with producer prices rising just 0.3% year on year in May, down from 0.8% in April.
It marked the slowest pace since July 2023, according to preliminary data from the Bank of Korea.
The decline was driven by falling prices in agricultural goods, energy products, and financial services.
On a monthly basis, the producer price index dropped 0.4%, accelerating from a 0.2% fall in April.
Japan, meanwhile, was facing a surge in food costs, with rice prices jumping 101.7% in May compared to a year earlier - the steepest rise in more than 50 years.
That followed back-to-back surges of 98.4% in April and 92.1% in March.
The price spike had prompted the government to release emergency rice reserves to stabilise the market, and came as Japan's core inflation hit 3.7% in May, its highest level since January 2023.
Reporting by Josh White for Sharecast.com.
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