Asia-Pacific stock markets are seeing mixed trade Friday morning, with investors carefully watching escalating tensions between Israel and Iran and analyzing new economic data from China.
The escalating geopolitical situation, particularly reports that US President Donald Trump is weighing a military strike on Iran, is casting a shadow over regional sentiment, with Indian markets like the Sensex expected to open lower.
The global market mood remains cautious, largely due to the deepening conflict between Israel and Iran.
Adding to the unease, former and current US officials have told NBC News that President Donald Trump is considering a military strike on Iran, while simultaneously demanding “UNCONDITIONAL SURRENDER!” from the country’s leader, Ayatollah Ali Khamenei, in a Truth Social post.
These comments have intensified speculation about potential direct US involvement in the conflict, which could have far-reaching consequences.
Despite these significant geopolitical concerns, market performance across Asia is varied.
Mainland China’s CSI 300 index started the day flat, and Hong Kong’s Hang Seng Index managed to add 0.56%.
This came after the People’s Bank of China (PBoC), as expected, kept its key loan rates unchanged, holding the 1-year loan prime rate at 3.0% and the 5-year LPR at 3.5%.
However, other major regional indices faced downward pressure.
Japan’s benchmark Nikkei 225 dropped 0.14%, with the broader Topix index falling 0.25% in what’s described as choppy trade.
Over in Australia, the S&P/ASX 200 also fell, down 0.61% in similarly volatile conditions.
Economic insights: Japan’s inflation, Korea’s PPI
Amidst the geopolitical backdrop, key economic data releases provided further insights.
Japan’s core inflation rate climbed to 3.7% in May, its highest level since January 2023.
This metric, which excludes fresh food costs, came in higher than the 3.6% expected by economists polled by Reuters and was up from April’s print of 3.5%.
This persistent inflation will be closely watched by the Bank of Japan.
In South Korea, the Kospi index saw an increase of 0.65%, and the small-cap Kosdaq climbed 0.73%.
South Korea also released its producer price index (PPI) figures for May, which edged up 0.3% year on year.
This indicates the lowest growth in wholesale prices since they fell in July 2023, according to LSEG data.
On a month-on-month basis, the PPI fell 0.4% in May, a deeper decline than April’s 0.2% drop, suggesting some easing in factory gate prices.
Indian markets brace for lower open amid global unease
The Indian stock market is expected to open lower on Friday, June 20.
The rising tension between Israel and Iran has made investors nervous globally, and this sentiment is likely to weigh on early trade for both the Sensex and Nifty.
As of 8:00 a.m. IST, Gift Nifty futures were trading at 24,800. This suggests that the Nifty50 may open near its previous closing level of 24,793.25, indicating a tepid start.
On Thursday, both the Sensex and Nifty ended almost flat, while broader market indices saw a dip as traders became cautious due to the heightened global uncertainty.
Adding to the uncertainty for Indian markets is the awaited response from the US government.
The White House has stated that President Donald Trump will make a decision within two weeks on whether the US would provide military support to Israel.
With Wall Street remaining closed on Thursday for a national holiday, Indian markets received little guidance from overnight US trading.
Despite this weak global mood, domestic institutional investors (DIIs) continue to show confidence, remaining net buyers of Indian stocks for the 23rd session in a row on Thursday.
Their steady buying has provided some cushion against potential foreign investor selling and added liquidity to the market.
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