Asian equities weakened on Wednesday as investors reacted to stronger-than-expected US inflation data and ongoing uncertainty over the Iran ceasefire, which has kept energy prices elevated and risk appetite subdued.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6%, marking a second consecutive session of declines as regional markets tracked Wall Street losses and persistent geopolitical concerns.
The cautious tone followed a selloff in US equities overnight, where the S&P 500 slipped 0.2% and the Nasdaq Composite dropped 0.7%, pressured by inflation data showing consumer prices rose at the fastest pace in three years in April.
Korea leads regional losses amid tech weakness
South Korea’s Kospi index extended losses, falling as much as 3.2% at one point before recovering part of the decline. The index remains volatile after recent record highs driven by an artificial intelligence-led rally.
Samsung Electronics shares plunged 5.7% after wage negotiations with its labour union failed, raising the prospect of a large-scale strike involving more than 50,000 workers that could disrupt semiconductor production.
Japan’s Nikkei 225 slipped 0.2% while S&P 500 e-mini futures edged 0.1% lower, reflecting continued caution across global markets.
Inflation and geopolitics drive risk-off mood
Investor sentiment remains under pressure from persistent geopolitical tensions in the Middle East and the economic impact of elevated oil prices following disruptions linked to the Iran conflict.
US President Donald Trump said on Tuesday he does not expect China’s involvement to be necessary in resolving the Iran situation, ahead of his scheduled meeting with Chinese President Xi Jinping later this week.
The Strait of Hormuz remains a key focus, with oil prices staying above US$100 per barrel since late February after military actions involving the US and Israel disrupted supply routes.
Rate expectations shift higher
Markets are also adjusting to a higher-for-longer interest rate outlook after US inflation surprised to the upside.
Traders have increasingly priced out expectations of rate cuts this year, with CME FedWatch data showing rising probabilities of a potential rate hike later in 2026.
US Treasury yields remained elevated, with the 10-year yield holding at 4.469%, its highest level since July, while the US dollar index stayed firm for a third straight session.
Mixed moves across commodities and crypto
In other markets, gold edged up 0.1% to US$4,718.48, while bitcoin slipped 0.2% to US$80,508.37 and ether fell 0.4% to US$2,275.36.
The overall tone across Asian trading desks remained cautious, with investors balancing inflation risks, geopolitical uncertainty and shifting central bank expectations.
Reuters
