(Sharecast News) - Asia-Pacific markets ended Wednesday's session mixed, as geopolitical tensions in the Middle East and hawkish rhetoric from US president Donald Trump unnerved investors.
Trump called for the "unconditional surrender" of Iran and was reportedly considering a military strike, according to NBC News, heightening fears of regional conflict and global instability.
"Crude oil prices remained close to a five-month peak amid concerns that rising tensions in the Middle East might lead to increased US involvement," said TickMill market strategy partner Patrick Munnelly.
"In Asia, stocks exhibited mixed performance ahead of the Federal Reserve's monetary policy announcement.
"Although the widespread sell-off in markets from earlier in the week eased a bit, the general sentiment continued to be gloomy."
Munnelly noted that MSCI's most comprehensive index of Asia-Pacific shares, excluding Japan, dropped by 0.3%, while West Texas Intermediate crude increased by as much as 1.1% after reaching its highest point in nearly five months on Tuesday, following Trump's call for Iran's surrender and his warning of potential strikes against the country's leaders.
"While Hong Kong shares dipped, those in Japan rose after the S&P 500 fell by 0.8% in New York.
"Treasuries saw slight declines in Asia but managed to retain most of their gains from Tuesday, which were influenced by geopolitical uncertainties and disappointing US data regarding retail sales, housing, and industrial activity.
"Bloomberg's dollar index remained stable after experiencing its largest rise in a month during the US trading session, the conflict has shown that the dollar continues to hold some status as a safe haven in specific circumstances, especially when the conflict is perceived to increase the likelihood of disrupting global oil supply and when it shifts traders' focus away from US-specific risks."
Markets mixed on fears for Middle East stability
Japan's Nikkei 225 rose 0.9% to close at 38,885.15, supported by strong gains in technology and construction stocks.
Nintendo climbed 6.59%, Taisei advanced 5.13%, and Lasertec added 4.77%.
The broader Topix index also rose, gaining 0.77% to finish at 2,808.35.
Chinese equities were broadly flat - the Shanghai Composite edged up 0.04% to 3,388.81, while the Shenzhen Component gained 0.24% to close at 10,175.59.
Individual stocks were volatile, with Harbin Xinguang Optic Electronics soaring 20.01%, Nuode Investment jumping 10.1%, and Gansu Mogao Industrial Development rising 10.05%.
Hong Kong's Hang Seng Index fell 1.12% to 23,710.69, dragged down by weakness in key consumer and property names.
Li Auto dropped 4.14%, China Resources Land declined 3.55%, and Trip.com Group slid 3.5%.
South Korea's Kospi 100 outperformed, rising 1.04% to 2,981.37.
Naver surged 17.92%, while SK Innovation gained 10.98% and NCsoft rose 8.73%, buoyed by optimism in the tech and energy sectors.
Australia's S&P/ASX 200 slipped 0.12% to 8,531.20, weighed by sharp losses in resource stocks.
Omni Bridgeway fell 7.19%, Mineral Resources dropped 4.9%, and Fortescue Metals Group lost 4.02%.
In New Zealand, the S&P/NZX 50 declined 0.1% to 12,627.32.
Tourism Holdings fell 2.17%, SkyCity Entertainment Group dropped 2.13%, and Meridian Energy eased 2.06%.
Currency markets reflected risk aversion, with the dollar last down 0.24% against the yen to trade at JPY 144.94, while it lost 0.39% against the Aussie to AUD 1.5384, and retreated 0.28% against the Kiwi, changing hands at NZD 1.6583.
Oil prices edged lower as geopolitical concerns competed with demand worries.
Brent crude futures were last down 0.9% on ICE at $75.70 per barrel, while the NYMEX quote for West Texas Intermediate dropped 0.86% to $74.20.
Japan exports decline in May, Singapore outlook worsens
In economic news, Japan's exports declined 1.7% year on year in May, marking the steepest drop since September last year and reversing a 2% gain in April.
While the fall was less severe than the 3.8% contraction forecast by economists polled by Reuters, it underscored persistent weakness in external demand.
Imports also dropped 7.7% in May, exceeding the expected 6.7% fall.
The continued drag from trade followed a 0.2% contraction in Japan's economy during the March quarter, its first quarterly decline in a year.
In Singapore, economists lowered their growth expectations for 2025, citing rising geopolitical and trade tensions.
A quarterly survey conducted by the Monetary Authority of Singapore revealed a downgrade in full-year GDP growth forecasts to 1.7%, down from 2.6% in March.
Manufacturing, in particular, was now expected to contract by 0.3%, compared to the previous projection of 2.9% growth.
Despite the weaker outlook, Singapore's Ministry of Trade and Industry kept its official forecast unchanged at 0% to 2% growth for the year, following a 3.9% expansion in the first quarter.
Reporting by Josh White for Sharecast.com.
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