Most Asian equity markets extended modest advances on Wednesday as crude oil cooled from its recent surge, though risk appetite remained muted amid continued geopolitical tensions and ahead of a key U.S. inflation print.
Wall Street indexes finished largely unchanged overnight, and futures linked to those benchmarks were trading slightly higher in Asian hours by 02:40 GMT.
Oil retreat eases some pressure on markets
Regional stocks moved up after a choppy start to the week that had been dominated by large swings in global energy markets. Traders drew some reassurance from a pullback in crude prices, which had earlier climbed amid fears that conflict involving the U.S., Israel, and Iran could disrupt supply.
A report in the Wall Street Journal said the International Energy Agency had suggested its largest ever release of oil from strategic reserves as a way to steady markets and compensate for potential supply interruptions tied to the conflict.
Oil had briefly risen to near $120 a barrel as concerns grew that shipping through the Strait of Hormuz might be impeded. Prices eased, in part, after U.S. President Donald Trump said the war with Iran could end soon.
Regional equity movers
- Japan's Nikkei 225 climbed by more than 2%, while the broader TOPIX index rose 1.7%.
- South Korea's KOSPI jumped nearly 4% following a gain of over 5% in the prior session.
- In China, the Shanghai Composite was flat, while the Shanghai Shenzhen CSI 300 added 0.5%.
- Hong Kong's Hang Seng increased 0.3%.
- Australia's S&P/ASX 200 rose 0.4%, and Singapore's Straits Times Index edged down 0.3%.
- Futures tied to India's Nifty 50 were up about 0.1%.
Inflation watch as Fed clues awaited
Even with crude easing, investor sentiment remained guarded because there were limited signs the regional geopolitical situation was easing in a substantive way. The earlier spike in oil also elevated concerns about inflationary pressures worldwide, a particular worry for Asian economies that depend heavily on imported energy.
Market participants were awaiting the U.S. Consumer Price Index due later on Wednesday. The CPI release is expected to provide fresh information on inflation dynamics and could offer additional clues about the Federal Reserve's future interest rate path.
Overall, markets appeared to trade on a delicate balance between relief from easing energy prices and the lingering uncertainty from geopolitical developments, with attention turning to incoming economic data that could influence central bank policy decisions.