Asia-Pacific stock markets presented a mixed picture at Wednesday’s open, with investors cautiously navigating a landscape dominated by escalating tensions between Israel and Iran.
Adding to the unease, reports emerged that US President Donald Trump is mulling a military strike on Iran and has demanded the “unconditional surrender” of its leader, Ayatollah Ali Khamenei.
This heightened geopolitical risk overshadowed other regional economic data, with Indian benchmarks like the Sensex poised for a weaker start.
The already tense situation in the Middle East intensified as former and current US officials told NBC News that President Trump is considering military action against Iran.
Trump himself, in a post on Truth Social, starkly demanded “UNCONDITIONAL SURRENDER!” by Iran.
This aggressive US posturing has significantly amplified investor anxiety.
“Comments from President Trump have triggered speculation that the US will get more involved in the conflict between Iran and Israel that escalated significantly five days ago,” ANZ analysts wrote in a note, capturing the market’s apprehension.
Despite these overarching concerns, some regional markets managed to find positive footing. Japan’s benchmark Nikkei 225 added 0.47%, and the broader Topix rose 0.4%.
South Korea’s Kospi climbed 0.7%, and the small-cap Kosdaq was 0.66% higher.
However, the mood was more subdued elsewhere. Hong Kong’s Hang Seng index lost 0.87%, while mainland China’s CSI 300 was up a marginal 0.18%.
Australia’s S&P/ASX 200 traded flat.
Economic data points: Japan’s exports dip, adding to growth worries
Fresh economic data from Japan provided a mixed picture. Exports in May declined by 1.7% year-on-year.
While this was a softer fall than the 3.8% decline expected by economists polled by Reuters, it marked the sharpest decline since September 2024 and a reversal from the 2% gain recorded in April.
This data comes a day after the Bank of Japan, in its monetary policy statement, highlighted that the country’s growth was likely to “moderate” due to factors like trade, which would lead to a slowdown in overseas economies and a decline in domestic corporate profits.
Falling exports had already impacted Japan’s GDP, with the economy shrinking by 0.2% in the quarter ending March compared to the preceding period – the first quarterly contraction in a year.
Imports to Japan fell 7.7% in May, a steeper decline than the Reuters poll expectation of a 6.7% fall.
Indian markets brace for impact
Indian benchmark indices, the Nifty and Sensex, are set to open lower on Wednesday, June 18, as the escalating tensions between Israel and Iran keep global markets on edge.
The uncertainty was further compounded by reports suggesting President Trump is considering military action against Iran, intensifying pressure on Tehran amid its ongoing standoff with Israel.
Trends on Gift Nifty also indicated a tepid start for the Indian benchmark index, with Gift Nifty trading around the 24,834.50 level, a discount of nearly 34.3 points from Nifty futures’ previous close.
This follows a weaker session on Tuesday, where the domestic equity market ended lower, with the benchmark Nifty 50 closing below the 24,900 level.
The Sensex had declined 212.85 points, or 0.26%, to close at 81,583.30, while the Nifty 50 settled 93.10 points, or 0.37%, lower at 24,853.40.
Oil surges, US markets await Fed
The geopolitical tensions sent crude oil futures surging by more than 4% in the previous session.
The US crude oil contract for July delivery gained $3.07, or 4.28%, to close at $74.84 per barrel, while global benchmark Brent for August rose $3.22, or 4.4%, to $76.45.
Oil prices had initially closed lower on Monday on reports that Iran was seeking a ceasefire with Israel, but those hopes faded as the conflict continued for a fifth day, with President Trump adopting a harder line against Iran.
Oil prices have risen approximately 10% since Israel launched its air campaign against Iran’s nuclear and ballistic missile programs on Friday.
Meanwhile, US stock futures inched lower as traders braced for the Federal Reserve’s interest rate decision, due Wednesday afternoon stateside.
Overnight on Wall Street, all three major averages ended the trading day lower. The Dow Jones Industrial Average lost 299.29 points, or 0.70%, to close at 42,215.80.
The S&P 500 shed 0.84% to end at 5,982.72, while the Nasdaq Composite fell 0.91% and settled at 19,521.09.
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