Asia report: Markets mixed on inflation concerns, geopolitical tensions

(Sharecast News) - Asia-Pacific markets were mixed on Wednesday as investors weighed hotter-than-expected inflation concerns, renewed Middle East tensions and the upcoming meeting between US president Donald Trump and his Chinese counterpart Xi Jinping, where trade is expected to be discussed.

"Asian equities are again choosing AI optimism over geopolitical risk, with MSCI Asia Pacific up 0.6% as technology and semiconductor names lead," said Patrick Munnelly, market strategy partner at TickMill.

"South Korea surged 5% to a record high, reinforcing its role as one of the cleanest regional expressions of AI infrastructure demand, while a regional chip gauge also hit a fresh peak after the Philadelphia Semiconductor Index's record close."

Trump on Monday said the month-old ceasefire between the US and Iran was "unbelievably weak" and "on massive life support" after rejecting what he described as an "unacceptable" counterproposal from Tehran to end the conflict.

Defense secretary Pete Hegseth said Trump did not need congressional approval to restart strikes on Iran, after the administration passed the 60-day mark required by federal war powers law to receive authorisation for military force.

Oil prices eased despite the geopolitical concerns, with Brent crude futures last down 0.46% on ICE at $107.27 a barrel, and the NYMEX quote for West Texas Intermediate falling 0.72% to $101.44.

"The macro backdrop is less benign than the equity tape suggests," Munnelly said.

"Brent is back above $105 per barrel after Trump rejected Iran's latest proposal, effectively extending the disruption around the Strait of Hormuz and rebuilding the energy-risk premium."

Munnelly said that had pushed the 10-year Treasury yield up 4 basis points to 4.39%, strengthened the dollar across major currencies and weighed on gold despite the geopolitical backdrop, "as markets lean into the higher-for-longer rates implication".

"The key inflation question is whether the current situation remains a fuel shock or broadens into a second-round price impulse," he added.

"For now, US CPI at 3.8% year-on-year, up from 3.3%, was slightly hotter than expected but not a disaster - motor fuel is doing the heavy lifting, while pass-through into core goods still looks muted."

Most markets manage gains across Asia

In equities, Japan's Nikkei 225 rose 0.84% to 63,272.11, while the broader Topix gained 1.2% to 3,919.48.

Olympus jumped 19.83%, Furukawa Electric climbed 15.27%, and Taiheiyo Cement added 11.43%.

Japan's current account surplus rose to JPY 4,681.5bn in March from JPY 3,625.3bn a year earlier, beating expectations for JPY 3,879bn and marking the largest surplus on record.

The goods account surplus increased to JPY 830.5bn from JPY 611.3bn, as exports grew 11.7% and imports rose 10.0%.

The primary income surplus widened to JPY 4,630.7bn from JPY 3,832.6bn, while the secondary income deficit narrowed to JPY 522.0bn from JPY 778.9bn.

The services deficit widened sharply to JPY 257.8bn from JPY 39.8bn.

In China, the Shanghai Composite rose 0.67% to 4,242.57, while the Shenzhen Component advanced 1.67% to 16,089.75.

Suzhou TZTEK Technology climbed 19.99%, Beijing Jingneng Power gained 10.08%, and Danyang SYNGEN Intelligent Technology added 10.07%.

Hong Kong's Hang Seng Index edged up 0.15% to 26,388.44.

JD.com rose 8.28% after reporting first-quarter revenue of CNY 315.7bn, up 4.9% year on year, with net income of CNY 5.10bn, adjusted net income of between CNY 7.38bn and CNY 7.4bn, and earnings per share of CNY 3.54.

Retail revenue rose 1.8%, while retail profit reached CNY 15bn and the retail margin stood at 5.6%.

JD.com said third-party orders now accounted for more than 50% of total orders, with third-party gross merchandise value outpacing both first-party and overall GMV.

Its active merchant base grew by triple digits, while quarterly and annual active customers rose by more than 20% year on year.

JD Health International gained 7.53%, and JD Logistics rose 7.14%.

South Korea's Kospi 100 climbed 3.27% to 9,482.07, led by Hyundai Mobis, which jumped 18.43%.

LG Display rose 11.05%, and Hyundai Motor gained 9.91%.

South Korea's seasonally adjusted unemployment rate edged up to 2.8% in April from March's five-month low of 2.7%.

The economy added 74,000 jobs, the smallest increase in 16 months after two consecutive months of gains above 200,000, bringing total employment to 28.961 million.

The number of unemployed fell by 2,000, or 3.8% year on year, to 853,000, while the labour force participation rate declined to 62.7% from 63.0%.

Stocks weaker in Sydney, Wellington

Markets were weaker down under, as Australia's S&P/ASX 200 fell 0.46% to 8,630.40.

Paladin Energy dropped 12.05%, Temple & Webster Group lost 6.39%, and PEXA Group declined 4.03%.

On the data front, the value of new owner-occupier loan commitments for dwellings fell 4.3% quarter on quarter to AUD 61.4bn in the first quarter, reversing a downwardly revised 9.4% rise in the previous quarter.

First-home buyer demand slipped 6.7% after a 15.2% jump in the fourth quarter, while demand from non-first-home buyers fell 5.0% after a 6.5% increase.

On an annual basis, owner-occupier lending rose 14.3%.

Investment lending for housing fell 3.0% to AUD 41.5bn, while investment loan values were up 25.3% year on year.

Across the Tasman Sea, New Zealand's S&P/NZX 50 slipped 0.13% to 13,063.06.

Eroad fell 5.83%, Westpac Banking Corporation lost 4.53%, and Scales Corporation declined 4.41%.

Greenback makes gains on regional G10 peers

In currencies, the dollar was last up 0.16% on the yen at JPY 157.88, as it gained 0.04% against the Aussie to AUD 1.3818, and advanced 0.45% on the Kiwi to NZD 1.6878.

Reporting by Josh White for Sharecast.com.