(Sharecast News) - Asia-Pacific markets advanced on Wednesday, with South Korea's Kospi leading regional gains as investors assessed stronger-than-expected Japanese trade data and awaited the Federal Reserve's latest rate decision.
US stock futures were little changed, while escalating tensions in the Middle East, including fresh attacks on the United Arab Emirates' energy infrastructure, kept investors cautious amid fears of prolonged supply disruptions.
"Global stock markets extended their rally into a third consecutive day as investors shrugged off immediate geopolitical tensions, focusing instead on potential signs of market stability," noted Patrick Munnelly, market strategy partner at TickMill.
The regional backdrop remained dominated by geopolitical risk, with a fresh wave of attacks on UAE energy assets following a drone strike on the world's largest ultra-sour gas development, a fire at the Fujairah Oil Industry Zone, and damage to a tanker near the strategically vital Strait of Hormuz.
Munnelly added that "this positive momentum unfolded against the backdrop of intensifying conflict in the Middle East, with no clear resolution in sight," noting that rising tensions continued to disrupt energy markets and stoked inflation concerns.
Stocks in the green across Asian markets
In Japan, the Nikkei 225 surged 2.87% to 55,239.40, while the broader Topix rose 2.49% to 3,717.41.
Gains were led by Tokyo Electric Power Company, up 16.3%, Mitsubishi Materials, which climbed 14.28%, and Mitsui OSK Lines, up 11.76%.
Data showed Japan's exports rose 4.2% year on year in February, slowing sharply from January's 16.8% increase but beating economists' expectations of a 1.6% rise.
Exports to mainland China fell 10.9% and shipments to the US declined 8%, with auto exports to the US dropping 14.8%.
However, demand from other regions provided support, with exports to Hong Kong jumping 32.3% and shipments to Southeast Asia rising 5.1%, making the bloc Japan's second-largest export destination.
Exports to Western Europe increased 17.5%, including gains of 10.9% to Germany and 18.9% to the UK.
Semiconductor exports surged 25.1%, while motor vehicle exports rose 2.5%.
Imports climbed 10.2%, below expectations of an 11.5% increase.
The data came ahead of a Bank of Japan policy meeting and a planned meeting between prime minister Sanae Takaichi and US president Donald Trump.
Chinese markets also moved higher, with the Shanghai Composite rising 0.32% to 4,062.98 and the Shenzhen Component gaining 1.05% to 14,187.80.
Tianjin Benefo Tejing Electric, Zhejiang Great Shengda Packaging and Chahua Modern Housewares each rose around 10%.
In Hong Kong, the Hang Seng Index added 0.61% to 26,025.42, led by ZTO Express, up 7.44%, New Oriental Education & Technology, which gained 5.17%, and Sino Biopharmaceutical, up 3.31%.
South Korea outperformed the region, with the Kospi 100 jumping 5.76% to 6,845.23.
Lotte Chemical surged 16.81%, Kumho Petro Chemical rose 10.9%, and LS Industrial Systems gained 9.32%.
Sentiment was supported by policy signals, as president Lee Jae Myung called for sweeping capital market reforms aimed at eliminating the "Korea discount" and achieving a "Korea premium."
Financial Services Commission chief Lee Eog-weon said authorities would use current volatility to push reforms, including accelerating the delisting of weak firms, tightening rules on duplicate listings, and revitalising the Kosdaq and Konex markets.
Sydney and Wellington join regional rally
Turning down under, Australia's S&P/ASX 200 edged up 0.31% to 8,640.60, with DroneShield rising 10.45%, Sims Metal Management up 9.88%, and Telix Pharmaceuticals gaining 5.9%.
New Zealand's S&P/NZX 50 climbed 1.01% to 13,315.60, led by Tourism Holdings, up 6.57%, Scales Corporation, which rose 4.06%, and Argosy Property, up 3.6%.
Munnelly noted that "the RBA kicked off a busy week for policy meetings with a 25 basis point rate hike, raising rates to 4.1%," adding that markets anticipate further tightening as inflation risks persist, a backdrop that had been "supportive of the AUD."
Dollar mixed against regional peers as oil prices diverge
In currency markets, the dollar was little changed against the yen at JPY 159.03, up 0.02%, while it slipped 0.02% on the Aussie to AUD 1.4072 and rose 0.09% against the Kiwi to NZD 1.7087.
Oil prices were mixed, with Brent crude futures last up 0.26% on ICE at $103.69 per barrel, while the NYMEX quote for West Texas Intermediate fell 1.58% to $94.69.
Reporting by Josh White for Sharecast.com.
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