Asian Shares Muted After Tuesday's Relief Rally

(RTTNews) - Asian stocks ended on a cautious note Wednesday after rising sharply in the previous session on Israel-Iran ceasefire relief.

A U.S.-brokered ceasefire between Israel and Iran appeared to be holding but elsewhere, Israel's army said seven of its soldiers were killed in combat in Gaza, where the war with Palestinian militant group Hamas continued.

The U.S. dollar struggled to regain lost ground in Asian trade after Federal Reserve Chair Jerome Powell gave balanced comments on prospects for rate cuts.

Gold edged up slightly after sharp losses in the prior session. Oil prices jumped nearly 2 percent but held near multi-week lows on the prospect that crude oil flows would not be disrupted.

China's Shanghai Composite surged 1.04 percent to 3,455.97 and Hong Kong's Hang Seng index jumped 1.23 percent to 24,474.67 amid bets that Fed rate cuts amid a slump in oil prices will weaken the U.S. dollar and spur inflows to Asian markets.

Japanese markets eked out modest gains to end at over four-month high. The Nikkei average rose 0.39 percent to 38,942.07, with chip-related stocks like Advantest and Tokyo Electron surging more than 3 percent each. The broader Topix index closed little changed with a positive bias at 2,782.24.

Olympus Corp plummeted 10.6 percent after the U.S. Food and Drug Administration (FDA) issued alerts to stop imports of certain medical devices made by the company in Japan.

Seoul stocks ended slightly higher, with the Kospi average edging up 0.15 percent to close at 3,108.25.

Following a review, MSCI said the limited convertibility of the Korean won in the offshore currency market is a key barrier to its reclassification to developed market status.

Australian markets ended marginally higher as banks gained ground, offsetting declines in the mining sector. Australian consumer price inflation slowed more than expected in May and the closely watched core measure hit three-and-a-half-year lows, setting the stage for a third cut in interest rates by the Reserve Bank of Australia next month.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index finished marginally lower at 12,460.96, extending losses for the sixth consecutive session as May month exports and imports showed little change from April.

U.S. stocks rallied overnight as a fragile truce between Israel and Iran helped offset weak consumer confidence data and comments from Fed Chair Jerome Powell that rate cuts can wait until the economic effects of tariff increases are better known.

At the same time, Powell hinted that lower inflation and weaker labor hiring could lead to an earlier rate cut, prompting traders to price in two Fed cuts by the end of 2025, with a first move in September far more likely than next month.

The tech-heavy Nasdaq Composite surged 1.4 percent, the Dow gained 1.2 percent and the S&P 500 rose 1.1 percent to reach their best closing levels in four months.