Hong Kong’s Hang Seng index led declines in Asia-Pacific markets on Thursday, falling over 2% as investors weighed the U.S. Federal Reserve’s decision to keep interest rates steady and the ongoing conflict between Israel and Iran. Mainland China’s CSI 300 also dropped, down 0.82%, while Japan’s benchmark index fell 1.02% to close at 38,488.34. The Topix declined 0.58% to end the trading day at 2,792.08.
In contrast, South Korea’s Kospi added 0.19% to close at 2,977.74, and Australia’s market ended the day flat at 8,523.7.
In Washington, U.S. President Donald Trump convened his national security advisors in the White House Situation Room for the second time in two days to discuss potential military action on Iran amid its conflict with Israel. The meeting commenced shortly before 5 p.m. ET on Wednesday. The U.S. Federal Reserve held interest rates steady on Wednesday, leaving its benchmark rate unchanged at 4.25%-4.5%, a level it has maintained since December.
Fed Chair Jerome Powell indicated that the committee will wait to see the impact of President Trump’s tariffs on inflation before making any monetary policy adjustments. The Fed, however, did point to two potential rate cuts later this year. On Wall Street, the three major stock averages ended the trading day mixed.
The Dow Jones Industrial Average lost 44.14 points, or 0.10%, closing at 42,171.66. The S&P 500 slipped 0.03% to close at 5,980.87, while the Nasdaq Composite inched up 0.13% to settle at 19,546.27.
Middle East conflict impacts markets
The Vietnamese dong weakened 0.13% to a record low of 26,127 against the U.S. dollar as of 11.15 a.m. local time, following the strengthening of the U.S. dollar in recent days. The dollar index, measuring the greenback against a basket of currencies, gained 1% since June 17. Other Southeast Asian currencies also weakened, with the Thai baht depreciating as much as 0.6% to 32.845 against the dollar, the lowest since June 2, and the Indonesian rupiah falling 0.49% to 16,375 against the dollar.
Australia’s unemployment rate remained unchanged at 4.1% in May, consistent with economists’ expectations. This marks the fifth consecutive month the rate has held steady at this level. Australia’s central bank has forecasted a slight increase in the unemployment rate later this year, anticipating it to be “a bit below 4.5%.”
Aberdeen Investments expressed a favorable outlook on China and Europe equity markets due to their “strong” policy tools capable of offsetting the negative impact of tariffs.
Ray Sharma-Ong, head of multi-asset investment solutions in Southeast Asia, noted that China’s market is further supported by a multi-pronged equity market program. Additionally, South Korea was highlighted for its “attractive opportunities” driven by growth-oriented reforms and improving corporate governance. Shares of Japan’s Nippon Steel rose 1.33% after completing its acquisition of U.S. Steel.
U.S. Steel shares stopped trading at 8:30 a.m. ET on Wednesday following the acquisition. DoubleLine Capital CEO Jeffrey Gundlach suggested that gold could reach $4,000 as institutions increase their buying amid heightened geopolitical uncertainty. Gold traded around $3,392.08 an ounce on Wednesday.
