Asian equities traded sideways as uncertainty surrounding United States–Iran peace talks limited risk appetite among investors [1]. At the time of reporting, Japan’s Nikkei 225 was up 0.03% to near 53,623, Hong Kong’s Hang Seng Index rose 0.88 to 25,074, and the SSE Composite Index gained 0.75 to 3,920. In contrast, South Korea’s Kospi declined 0.59% to near 5,430 [1]. President Donald Trump announced that Washington would pause attacks on Iran’s energy sector for 10 days at Tehran’s request; however, Iran denied making such a request, highlighting fragile diplomacy and the low likelihood of a near-term ceasefire [1]. Elevated oil prices have intensified inflation concerns, reinforcing hawkish expectations for central banks [1].
A growing number of Asia-Pacific governments are taking steps to stabilize financial markets and support liquidity as the prolonged conflict pressures regional currencies and drives broader volatility [1]. Japanese equities recovered intraday losses but remain exposed to downside risks following the previous session’s decline and a sharp selloff on Wall Street, which was driven by skepticism over Iran negotiations [1]. The Bank of Japan (BoJ) is expected to highlight potential volatility in underlying inflation in its upcoming quarterly report, according to former executive Kazuo Momma, as the Middle East conflict complicates policy decisions [1].
The Japanese government will use JPY 800 billion ($5 billion) in reserves to fund gasoline subsidies, with costs reaching up to JPY 300 billion monthly [1]. Meanwhile, South Korea plans a 5 trillion Won bond buyback to inject liquidity and cap rising yields after three-year government bond yields climbed to their highest level since mid-2024 [1].
CONCLUSION
Asian stock markets remain cautious amid ongoing US-Iran tensions and elevated oil prices, prompting governments and central banks to intervene with liquidity measures and subsidies. While some indices showed modest gains, downside risks persist due to fragile diplomacy and inflation concerns. The market is likely to remain volatile until geopolitical uncertainties are resolved.