Asia report: Markets mixed on geopolitical concerns, Fed comments
By Josh White
Date: Thursday 26 Jun 2025
(Sharecast News) - Asian stock markets were mixed on Thursday as investors weighed easing tensions in the Middle East alongside cautious signals from the US Federal Reserve
Fed chair Jerome Powell indicated in his second day of testimony in Washington that rate cuts could be possible if inflationary pressures proved temporary, although he declined to give a timeline.
"In Asia, the MSCI broad index of regional stocks gained approximately 0.5%, while US equity futures posted modest increases," noted TickMill market strategy partner Patrick Munnelly.
"Tech stocks saw support from Nvidia's overnight rally, which propelled the chipmaker's shares to an all-time high.
"Meanwhile, oil prices rose for a second straight day as investors navigated a fragile ceasefire in the Middle East."
Despite that stabilisation, Munnelly noted that market sentiment remained cautious, with Russia signalling openness to another production increase at the upcoming OPEC+ meeting.
"Overnight, the dollar weakened, and Treasury yields edged lower amid speculation of a more dovish Federal Reserve chair.
"The move followed reports suggesting president Donald Trump is considering an early nomination for the next Fed chair, with the leading candidates favouring more market-friendly policies."
Most markets fall, with Tokyo and Wellington the exceptions
In Japan, equities outperformed, with the Nikkei 225 climbing 1.65% to 39,584.58, its highest level in five months.
Gains were led by Ebara, which surged 9.84%, while Alps Electric and SoftBank Group rose 5.62% and 5.52% respectively.
The broader Topix index added 0.81% to 2,804.69.
Mainland Chinese stocks declined, with the Shanghai Composite down 0.22% at 3,448.45 and the Shenzhen Component falling 0.48% to 10,343.48.
Losses were steep among certain small-cap names, including Changzhou Youon Public Bicycle System, which dropped 9.72%, China World Trade Center down 8.37%, and Zhejiang Three Stars New Materials off 7.91%.
Hong Kong's Hang Seng Index shed 0.61% to 24,325.40, pressured by falls in Geely Automobile Holdings, down 4.88%, China Shenhua Energy, down 4.25%, and New Oriental Education and Technology, which slipped 3.27%.
South Korea's Kospi 100 fell 0.98% to 3,106.45, dragged by sharp declines in major tech names.
KakaoBank plunged 14.34%, Kakao Corporation fell 9.08%, and Doosan Robotics dropped 8.14%.
Australia's S&P/ASX 200 dipped 0.1% to 8,550.80, weighed down by Xero, which slid 5.26%, Northern Star Resources down 2.28%, and Tabcorp Holdings off 2.07%.
New Zealand bucked the regional trend, with the S&P/NZX 50 rising 0.15% to 12,480.05.
Gains were led by the Fonterra Shareholders Fund, up 4.17%, ANZ Group advancing 2.74%, and EBOS Group rising 2.55%.
In currency markets, the dollar was last down 0.83% on the yen to trade at JPY 144.03, as it slipped 0.35% against the Aussie to AUD 1.5300, and lost 0.34% on the Kiwi to change hands at NZD 1.6503.
Oil prices eased slightly, with Brent crude futures last down 0.25% on ICE at $67.51 per barrel, and the NYMEX quote for West Texas Intermediate slipping 0.28% to $64.74.
Rice prices finally fall in Japan, Citi upgrades China growth outlook
In economic news, Japanese consumers were finally seeing relief from months of surging rice prices, according to fresh data from the country's agriculture ministry.
The average price of a five-kilogram bag of rice fell to JPY 3,920 for the week ended 15 June, marking the first time it dropped below JPY 4,000 since early March.
It brought prices within the target set by prime minister Shigeru Ishiba, who in May pledged to bring them down, stating that "rice prices should be in the 3,000-yen range" and vowing to take personal responsibility.
Rising rice costs had triggered shortages and empty shelves across supermarkets nationwide.
In China, Citi raised its 2025 growth forecast to 5% from 4.7%, aligning with Beijing's official target.
The upgrade reflected stronger-than-expected growth in the first half of the year and resilient exports.
Citi analysts said they expected the recently-imposed 20% US tariff on fentanyl-related Chinese imports to be suspended or rolled back within months.
Despite an anticipated 10% drop in exports to the US this year, China's overall exports were still forecast to grow 2.3%.
Citi warned that deflation remained a risk, however, likely prompting Chinese policymakers to adopt incremental measures to address excess supply and capacity.
The bank said it expected the People's Bank of China to cut its main policy rate by 10 basis points in the second half of 2025 and lower the reserve requirement ratio by 50 basis points.
Additionally, it forecast a CNY 500b boost in fiscal stimulus from the finance ministry to support growth.
Reporting by Josh White for Sharecast.com.
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