(Sharecast News) - Asia-Pacific markets closed mostly higher on Wednesday as investors continued to assess the planned US-Iran peace deal and looked ahead to the Federal Open Market Committee meeting.
"The collapse in oil has changed the tone of global markets, supporting bonds and reducing near-term inflation pressure," said Patrick Munnelly, market strategy partner at TickMill.
"But it has not produced a clean equity rally because AI valuations remain under scrutiny and central banks are not ready to fully reverse their caution."
The moves followed US president Donald Trump's announcement on Monday that Washington and Tehran had reached a potential deal to end the war.
Pakistani prime minister Shehbaz Sharif said both sides had terminated military operations, with an official signing ceremony due to take place in Switzerland on Friday.
Oil prices were little changed, with Brent crude futures last up 0.03% on ICE at $78.98 per barrel, and the NYMEX quote for West Texas Intermediate down 0.05% at $76.01.
"Global bonds are rallying as oil continues to fall and investors prepare for Kevin Warsh's first FOMC meeting as Fed Chair," Munnelly said.
He said lower oil was helping pull inflation expectations lower and had pushed investors back into duration, with Australian and Japanese 10-year yields down around five basis points and Treasury yields holding near recent lows.
"The oil move is the central macro development," he said.
"Brent below $79 per barrel is a major shift from the conflict-driven highs and materially reduces the near-term pressure on headline inflation.
"But the market is still not fully back to the pre-conflict world."
Investors were also focused on Wednesday's Federal Reserve decision, the first under new chairman Kevin Warsh.
Markets largely expected the Fed to keep interest rates unchanged in a target range of 3.5% to 3.75%, although most Wall Street Fed watchers expected Warsh not to submit a "dot" to the FOMC's quarterly update of individual rate projections.
"Today's Fed meeting is less about the rate decision and more about Warsh's framework: less guidance, possible emphasis on trimmed-mean inflation, AI and productivity as a structural theme and a longer-term balance-sheet debate," Munnelly said.
Most regional bourses finish higher
Japan's Nikkei 225 rose 0.72% to 69,902.25, while the broader Topix gained 0.55% to 4,013.23.
Lasertec jumped 13.16%, Kawasaki Heavy Industries rose 7.75%, and Japan Steel Works added 7.07%.
Japan's exports grew 17% year on year in May, their fastest pace since November 2022, beating Reuters-polled expectations for 16.2% growth and accelerating from 14.8% in April.
The increase was driven by strong demand for cars and semiconductors, with semiconductor exports surging 61.2% by value and car shipments rising 16.4%.
The data came a day after the Bank of Japan raised its policy rate by 25 basis points to 1%, the highest level in more than 30 years, as inflation rises and the yen remains weak.
"Japan and Australia remain on a different track from the oil-led duration rally," Munnelly said.
"The BoJ has already raised rates, and Japan continues to stand apart from most developed-market central banks by moving gradually toward tighter policy."
In China, the Shanghai Composite rose 0.4% to 4,108.08, while the Shenzhen Component gained 1.31% to 15,880.95.
Xi'an Bright Laser Tech surged 20%, Triumph New Energy rose 10.05%, and China National Chemical Engineering added 10.04%.
Munnelly said the People's Bank of China was signalling a possible evolution in its monetary framework, with greater emphasis on overnight rates and enhanced short-term interest-rate management.
"Increasing overnight reverse repo operations would bring the PBoC somewhat closer to the operating frameworks used by major global central banks," he said.
"This is not a dramatic easing signal by itself, but it suggests a desire for more precise liquidity control at a time when domestic demand remains weak and policy transmission is uneven."
Hong Kong's Hang Seng Index fell 0.74% to 24,312.16.
Haidilao International dropped 3.95%, Li Auto lost 3.66%, and JD Health International declined 3.44%.
South Korea's Kospi 100 advanced 1.97% to 11,094.11.
SK Square rose 6.33%, SK Hynix gained 5.84%, and Big Hit Entertainment added 5.61%.
Sydney manages gains, Wellington in the red
Heading down under, Australia's S&P/ASX 200 climbed 0.54% to 8,966.30.
Emerald Resources gained 6.5%, ARB Corporation rose 6.46%, and Genesis Minerals added 6.16%.
"The RBA is on hold but retains a tightening bias because of concerns about fuel-price pass-through," Munnelly said of the central bank's Monday decision.
"Lower oil helps both, but neither central bank is ready to declare the inflation problem solved."
Across the Tasman Sea, New Zealand's S&P/NZX 50 slipped 0.25% to 13,392.98.
Serko fell 4.76%, Investore Property lost 2.83%, and Meridian Energy declined 2.68%.
New Zealand posted a current account deficit of NZD 1.01bn in the first quarter of 2026, narrowing from a downwardly revised NZD 5.64bn deficit in the previous quarter but widening from a NZD 0.71bn deficit a year earlier.
The figure was slightly smaller than market expectations for a NZD 1.03bn shortfall.
Dollar mixed against regional peers
In currencies, the dollar was last down 0.12% on the yen to trade at JPY 160.24, as it rose 0.09% against the Aussie to AUD 1.4162, and gained 0.27% on the Kiwi to change hands at NZD 1.7195.
Reporting by Josh White for Sharecast.com.
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