Hong Kong’s Hang Seng index led declines in the Asia-Pacific markets Thursday, falling over 2%, as investors weighed the U.S. Federal Reserve’s decision to keep interest rates steady amid the ongoing conflict between Israel and Iran, which continues to impact market sentiment. Mainland China’s CSI 300 also saw a decline, down by 0.82%. Japan’s benchmark Nikkei lost 1.02% to close at 38,488.34, while the Topix index declined 0.58%, ending the day at 2,792.08.
In contrast, South Korea’s Kospi edged up by 0.19% to close at 2,977.74, and Australia’s index ended the day flat at 8,523.7.
The U.S. Federal Reserve decided to maintain interest rates at their current level of 4.25%-4.5% on Wednesday. Fed Chair Jerome Powell indicated that the committee would monitor the impact of President Donald Trump’s tariffs on inflation before making any further adjustments to monetary policy. However, the Federal Reserve still anticipates two rate cuts later in the year.
Overnight on Wall Street, the leading indexes ended the trading day with mixed results. The Dow Jones Industrial Average declined by 44.14 points, or 0.10%, ending at 42,171.66. The S&P 500 slipped by 0.03% to close at 5,980.87, while the Nasdaq Composite inched up by 0.13%, settling at 19,546.27.
Middle East tensions hit Asia shares
The Vietnamese dong weakened to a record low against the U.S. dollar, falling 0.13% to 26,127 as of 11:15 a.m. local time. The decline is attributed to the strengthening of the U.S. dollar, which gained 1% since June 17.
Other Southeast Asian currencies also felt the pressure. The Thai baht depreciated by as much as 0.6% to 32.845 against the dollar, the lowest since June 2, while the Indonesian rupiah fell by 0.49% to 16,375 against the dollar. Australia’s unemployment rate remained steady at 4.1% in May, consistent with the previous month and meeting economists’ expectations.
This marks the fifth consecutive month with an unemployment rate of 4.1%. Australia’s central bank forecasts a slight increase in the unemployment rate later this year, projecting it to be “a bit below 4.5%.”
Shares of Japan’s Nippon Steel rose by 1.33% following the completion of its acquisition of U.S. Steel. U.S. Steel shares ceased trading at 8:30 a.m. ET on Wednesday after the acquisition was finalized, despite initial opposition from President Trump during his campaign.
In other news, DoubleLine Capital CEO Jeffrey Gundlach forecasted that gold prices could reach $4,000 soon, driven by increased institutional buying amidst geopolitical uncertainties. Gold traded around $3,392.08 an ounce on Wednesday.
