Asia report: Markets fall as geopolitical tensions tighten further
By Josh White
Date: Thursday 19 Jun 2025
(Sharecast News) - Markets across the Asia-Pacific region closed mostly lower on Thursday, with Hong Kong leading the declines as investors digested the US Federal Reserve's latest policy decision and rising geopolitical tensions in the Middle East.
Stephen Innes, managing partner at SPI Asset Management, quipped that the drumbeat was not just getting louder, but that it was "echoing" across trading floors, rattling bonds, lifting oil, and sending equity risk premium "into the stratosphere".
"Reports now confirm that senior US officials are actively preparing for a possible strike on Iran within days," he commented.
"This isn't just posturing anymore. Washington is moving pieces into place, and the market is watching the chess clock wind down to midnight."
Innes noted that Trump's rhetoric had done a "full 180" - morphing from dealmaker to potential war commander.
"Days ago, the message was diplomacy. Today, it's 'I may do it, I may not', with a smirk that says the die might already be cast.
"What we're witnessing is the final act of a geopolitical slow burn now threatening to erupt into a regional inferno."
Markets decline as geopolitical tensions weigh on sentiment
Hong Kong's Hang Seng Index fell 1.99% to 23,237.74, as anxiety grew over a potential US military response to escalating conflict between Israel and Iran.
Among the index's laggards were CSPC Pharmaceutical Group, which dropped 6.4%, Zhongsheng Group, down 5.94%, and Alibaba Health Information Technology, which lost 5.26%.
In Japan, the Nikkei 225 shed 1.02% to close at 38,488.34, with heavy losses in tech stocks including Trend Micro, which plunged 8.39%, Screen Holdings, down 4.02%, and Taiyo Yuden, which fell 3.86%.
The broader Topix index dropped 0.58% to 2,792.08.
China's markets also retreated, with the Shanghai Composite down 0.79% to 3,362.11 and the Shenzhen Component declining 1.21% to 10,051.97.
Losses were steep among mid-cap stocks, with Hefei Metalforming Intelligent Manufacturing and Shanxi Huayang New Material each falling nearly 10%, alongside a 9.99% drop in Suli Co.
South Korea's Kospi 100 was the regional outlier, edging up 0.01% to 2,981.66, lifted by gains in select names such as Kakao, which surged 9.42%, Hyundai-Rotem up 7.89%, and SKC, which added 7.38%.
Australia's S&P/ASX 200 slipped 0.09% to 8,523.70, as mining and biotech stocks weighed.
Resolute Mining dropped 8.27%, Mesoblast declined 6.7%, and Megaport was down 6.01%.
In New Zealand, the S&P/NZX 50 lost 0.46% to finish at 12,569.05.
KMD Brands led losses, falling 6.78%, while Sky Network Television dropped 4.84% and Fletcher Building declined 3.4%.
In currency markets, the dollar strengthened slightly against regional peers, rising 0.14% on the yen to last trade at JPY 145.34, while it gained 0.57% against the Aussie to AUD 1.5452, and climbed 0.8% on the Kiwi, changing hands at NZD 1.6719.
Oil prices edged higher amid the geopolitical uncertainty, with Brent crude rising 0.44% on ICE to $77.04 per barrel, while the NYMEX quote for West Texas Intermediate was up 0.69% to $75.66.
Australian unemployment holds steady, Fed maintains rates
In economic news, Australia's unemployment rate remained unchanged at 4.1% in May, marking the fifth consecutive month at that level and matching economist expectations.
The data aligned with earlier forecasts from the Reserve Bank of Australia, which projected a modest rise in unemployment this year to just below 4.5%.
Meanwhile, the US Federal Reserve left interest rates unchanged overnight, as widely anticipated, while projecting two rate cuts later this year.
Despite signs of stabilisation, the Fed acknowledged ongoing uncertainty in the economic outlook, with its statement noting risks remained "elevated" on both sides of its dual mandate.
The central bank also downgraded its GDP growth expectations and raised its inflation forecast, reinforcing concerns about persistent price pressures amid sluggish growth.
Reporting by Josh White for Sharecast.com.
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