Asian markets trade mixed; Japan's Nikkei 225 rally 1%, while Kospi slips on profit-taking
Asian markets are trading with mixed sentiment on Wednesday amid a global tech rally and as US-Iran talks hit new hurdles. In fact, Japan's Nikkei 225 is up nearly 1%, while South Korea's Kospi falls over 1% as investors locked in gains following a stellar 70% rally last quarter, the best advance since 1998. Meanwhile, Australia's S&P/ASX 200 was largely flat, while Hong Kong’s markets are closed for a public holiday.
Stronger Manufacturing PMIs from Japan and China lifted the mood, though persistent geopolitical uncertainties keep a lid on the optimism. US negotiators Jared Kushner and Steve Witkoff arrived in Qatar on Tuesday for talks about the implementation of an initial deal to end the war in Iran. Tehran, however, denied any planned meeting with US envoys, clouding the prospects for a lasting peace agreement between the two countries.
Moreover, the US and Iran are still far apart on a framework that would fully open the strategic Strait of Hormuz. Meanwhile, the Wall Street Journal reported on Tuesday that US President Donald Trump has considered resuming large-scale military action against Iran in recent days but has decided to continue diplomatic efforts for now. This keeps the geopolitical risk premium in play, holding back bulls from placing aggressive bets.
Apart from this, elevated US Federal Reserve (Fed) rate hike expectations contribute to capping gains. According to the CME Group's FedWatch Tool, traders are currently pricing in around an 80% chance that the US central bank will raise borrowing costs at least once by the end of this year. The bets were lifted by the US Job Openings and Labor Turnover Survey (JOLTS), which showed that job openings edged up to 7.594 million, or a two-year high in May.
Furthermore, the Conference Board’s US Consumer Confidence Index rose to 91.2 in June from 90.6 in May. Adding to this, Cleveland Fed President Beth Hammack said that it remains possible that she’ll advocate for higher interest rates if inflation pressures don’t moderate. The market focus now shifts to Fed Chair Kevin Warsh's speech at the European Central Bank (ECB) Forum in Sintra, due later during the North American session.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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