The APAC stock markets showed a mixed performance, initially buoyed by the positive momentum on Wall Street, primarily driven by a tech rally. While major US indices saw significant gains, particularly the tech-heavy Nasdaq, investor sentiment was dampened in China due to concerns over recent stimulus measures that fell short of expectations. The market was also influenced by geopolitical developments as the RBNZ cut the Official Cash Rate by 50 basis points to 4.75%, which was anticipated, while the RBI decided to keep its Repurchase Rate unchanged at 6.50%. These monetary policy adjustments came amidst rising global tensions, particularly between Israel and Iran, which are impacting market dynamics and oil prices.
On the US front, equities soared with tech stocks leading the charge. The majority of sectors ended in the green except for Energy, which lagged due to a decline in crude oil prices after an NBC report suggested that Iranian energy facilities remained potential targets for Israeli strikes. This news contributed to heightened geopolitical concerns, although senior Israeli officials indicated a wish to avoid a full-scale war with Iran. The Fed also made headlines as its vice-chair acknowledged the intricate balance of risks in monetary policy decisions, hinting at possible further adjustments depending on economic developments and labor market conditions.
Meanwhile, the Asian equities landscape reflected mixed sentiment. The ASX 200 gained marginally on the strength of technology and telecommunications sectors, while the Nikkei 225 struggled to find momentum amid a lack of significant catalysts. Chinese indices, including the Hang Seng and Shanghai Composite, experienced fluctuations, clouded by the disappointment regarding fiscal stimulus measures and ongoing trade tensions with the EU and the US. This overall mixed sentiment was captured by US equity futures, which showed some signs of easing as key events approached, including the FOMC Minutes and various inflation reports.
In the fixed-income market, 10-year UST futures saw a slight rebound as investors awaited upcoming FOMC Minutes and Treasury supply announcements. Bund futures lacked direction amid subdued demand, and similarly, 10-year JGB futures saw weak interest due to improved risk appetite across Japan. With the FTSE Russell adding India to the EM bond index effective September 2025, the bond markets were set for significant shifts. Conversely, commodity markets saw a rebound in crude futures driven by reports of Israeli military considerations regarding Iranian energy targets, although these gains were capped by recent inventory builds.
Amid these financial developments, invited global attention has been on heightened geopolitical tensions in the Middle East, particularly regarding Israel’s response plans to recent Iranian missile attacks. Prime Minister Netanyahu’s government is reportedly coordinating with US officials to ensure any military actions are calculated to avoid escalating into broader conflict. The possibility of Israeli military action against Iranian targets has incited discussions on regional stability, with Israel already engaging in operations targeting Iranian-linked assets in Syria. These actions illustrate the complex interplay between global market dynamics and geopolitical realities wherein investor sentiment is heavily influenced by impending actions in conflict zones.
In Europe, the economic landscape was shaped by remarks from various ECB officials, who indicated the potential for monetary easing in light of declining but still elevated inflation rates. Concurrently, the UK government announced infrastructure investment plans despite rising government debt costs. As the EU positioned itself to challenge China’s recent anti-dumping measures, the broader implications of these moves reflected ongoing interdependencies and tensions in international trade and economic relations. Overall, mixed signals from economic data and geopolitical tensions shaped the current market outlook, underscoring the need for continuous monitoring and adaptive strategies in investment.
