Asia report: Most markets rise on hopes that ceasefire holds

(Sharecast News) - Asia-Pacific markets traded mixed on Wednesday as investors assessed the prospect of a lasting ceasefire between Israel and Iran alongside cautious signals from the US Federal Reserve.

Fed Chair Jerome Powell said overnight that the central bank was prepared to keep interest rates steady until there was greater clarity on the inflationary impact of tariffs, adding that policymakers were "well positioned to wait" before adjusting policy.

Patrick Munnelly, market strategy partner at TickMill, said Asian stocks mostly edged higher as the truce between Israel and Iran showed signs of holding, while Treasury investors raised their expectations for potential US interest rate cuts.

"On Wednesday, MSCI's index of Asian equities climbed, extending a more than 2% rally from the previous day after US president Donald Trump announced a ceasefire between the two Middle Eastern nations," he said.

"Meanwhile, US equity futures remained steady following Tuesday's gains, where the S&P 500 rose 1.1% and the Nasdaq 100 advanced 1.5%, marking its first new high since February.

"Treasuries stabilised along with the dollar index - the benchmark 10-year Treasury yield fell five basis points on Tuesday after Federal Reserve chair Jerome Powell noted that 'many paths are possible' for future monetary policy."

Munnelly noted that the decrease coincided with data revealing a drop in consumer confidence.

"Investors kept a close watch on developments in the Middle East, as the fragile peace agreement faced scrutiny.

"Both Iran and Israel appeared to be adhering to the ceasefire after initial violations drew criticism from Trump.

"Oil prices rebounded following their steepest two-day decline since 2022, as traders assessed the ceasefire and an industry report pointing to a further drop in US crude inventories."

Markets mixed as investors hope Iran-Israel ceasefire holds

In Japan, the Nikkei 225 rose 0.39% to 38,942.07, supported by gains in Taiyo Yuden, which jumped 7.16%, Pacific Metals up 4.08%, and chipmaker SUMCO, which added 3.93%.

The broader Topix index was little changed, up just 0.03% at 2,782.24.

Chinese equities outperformed, with the Shanghai Composite climbing 1.04% to 3,455.97 and the Shenzhen Component gaining 1.72% to 10,393.72.

Major movers in Shanghai included Cashway Technology, North Electro-Optic and Shanghai DZH, all rising by the daily limit of 10% or more.

Hong Kong's Hang Seng Index advanced 1.23% to 24,474.67, led by a surge in New Oriental Education and Technology, which gained 8.85%, while Hang Lung rose 8.79% and Sands China added 5.99%.

South Korea's Kospi 100 rose 0.41% to 3,137.18, bolstered by a sharp 11% jump in Korea Electric Power, alongside gains of 6.29% for Hyundai Engineering & Construction and 6.21% for Kogas.

Australia's S&P/ASX 200 edged up 0.04% to 8,559.20.

Collins Foods led the gains, rising 8.22%, followed by EML Payments up 5.71% and Appen adding 5.61%.

New Zealand's S&P/NZX 50 dipped 0.05% to 12,460.96, weighed down by Synlait Milk, which fell 2.94%, Heartland Group down 2.53%, and SkyCity Entertainment off 2.17%.

In currencies, the dollar strengthened against the yen, last rising 0.49% on the yen to trade at JPY 145.65, while it slipped 0.07% against the Aussie to AUD 1.5399, and fell 0.22% on the Kiwi, changing hands at NZD 1.6613.

Oil prices gained, with Brent crude futures last up 1.01% on ICE at $67.82 per barrel, and the NYMEX quote for West Texas Intermediate climbing 1.06% to $65.05.

Inflation eases further in Australia, raises rate cut expectations

In economic news, Australia's inflation eased further in May, with the monthly consumer price index rising 2.1%, its lowest since October 2024.

The figure was below economists' expectations of 2.3% and down from 2.4% in April, according to the Australian Bureau of Statistics.

Price growth slowed in food and housing, while transport costs continued to fall.

Following the data, Commonwealth Bank of Australia said it expected the Reserve Bank of Australia to cut interest rates by 25 basis points to 3.6% at its July meeting, with a further cut likely in August.

CBA economists said the "benign" inflation print, alongside a stable labour market, gives the RBA room to return the cash rate to a neutral level more quickly.

Meanwhile, China was reportedly expanding avenues for foreign investors to use the yuan as part of efforts to reduce reliance on the dollar.

According to CNBC, the push came as the dollar index had fallen more than 9% this year, while the offshore yuan had gained over 2%.

"China appears to be accelerating its de-dollarization efforts, though progress remains uneven," CNBC quoted Dan Wang of Eurasia Group as saying.

Reporting by Josh White for Sharecast.com.