Asia report: Markets mostly lower as investors watch Iran

(Sharecast News) - Asia-Pacific markets mostly declined on Tuesday as volatile oil prices and shifting signals from Washington on the Iran war weighed on sentiment. Patrick Munnelly, market strategy partner at TickMill, noted that "equity-index futures rose, while oil prices declined, following a report from the Wall Street Journal indicating that president Trump signalled to his aides a willingness to pause the US military campaign against Iran - even if the strategic Strait of Hormuz remains largely obstructed."

A report in the Journal said US president Trump had indicated a willingness to end hostilities even if the Strait of Hormuz remained largely closed, raising uncertainty over the conflict's trajectory as it entered its fifth week.

Oil markets were choppy, with Brent crude futures last down 0.37% on ICE at $112.36 per barrel, and the NYMEX quote for West Texas Intermediate declining 1.18% to $101.67.

Tokyo falls amid deluge of data

In Japan, equities came under pressure, with the Nikkei 225 falling 1.58% to 51,063.72 and the Topix down 1.26% to 3,497.86.

Losses were led by exporters and industrial names, including Fujikura, down 9.21%, Furukawa Electric, which dropped 7%, and Sumitomo Electric Industries, down 6.89%.

Economic data painted a mixed picture.

The unemployment rate edged down to 2.6% in February from 2.7% in January, while the job-to-applicant ratio rose to 1.19, underscoring continued labour market tightness.

However, retail sales fell 0.2% year-on-year, missing expectations for growth and reversing a 1.8% gain, with declines in fuel, non-store sales, and clothing.

On a monthly basis, retail trade dropped 2.0%. Industrial production also weakened, falling 2.1% month-on-month in February, reversing a 4.3% increase, although annual output rose 0.3%.

Mainland markets decline as manufacturing sector returns to growth

Chinese markets also declined, with the Shanghai Composite down 0.8% at 3,891.86 and the Shenzhen Component falling 1.81% to 13,478.06.

Stocks such as Ningbo Thermal Power, HeBei Jinniu Chemical Industry and Sichuan Expressway each dropped sharply.

Data showed China's manufacturing sector returned to growth in March, with the official PMI rising to 50.4 from 49.0, its strongest reading in a year and above expectations.

Production and new orders moved back into expansion territory, supported by stronger external demand, while the non-manufacturing PMI rose to 50.1.

However, rising input costs linked to higher energy and commodity prices clouded the outlook, with the raw material purchase price index surging to 63.9 and signs of margin pressure emerging as input costs outpaced output prices.

Hong Kong, Seoul also lower

Hong Kong's Hang Seng Index bucked the broader trend, edging up 0.15% to 24,788.14, supported by gains in Hansoh Pharmaceutical Group, up 7.26%, Midea Group, up 6.82%, and China Resources Mixc Lifestyle, which rose 6.52%.

South Korea saw the sharpest losses in the region, with the Kospi 100 plunging 4.71% to 5,701.31.

Declines were led by LIG Nex1, down 10.93%, SK Square, which fell 8.53%, and Doosan, down 7.73%.

Equities in the green down under

In Australia, the S&P/ASX 200 rose 0.25% to 8,481.80, with gains in Generation Development Group, up 7.42%, Temple & Webster Group, up 6.77%, and Xero, which added 6.55%.

Minutes from the Reserve Bank of Australia's March meeting showed policymakers were united on the need for restrictive financial conditions but split on the timing of further tightening, ultimately delivering a 25 basis point rate increase in a narrow 5-4 vote.

The central bank warned that persistently high oil prices could push headline inflation to around 5% in the June quarter, reinforcing a broadly hawkish stance even as risks to growth rise.

New Zealand's S&P/NZX 50 advanced 1.28% to 12,912.11, with Eroad, Vista Group International and Air New Zealand posting solid gains.

However, business sentiment deteriorated sharply in March, with the ANZ Business Outlook survey showing headline confidence falling to 32.5 from 59.2 and firms' own activity outlook dropping to 39.3 from 52.6.

The data pointed to a loss of economic momentum even as inflation pressures remained elevated, complicating the policy outlook for the Reserve Bank of New Zealand.

Dollar mixed against regional peers

In currency markets, the dollar was little changed against the yen at JPY 159.63, down 0.05%, while it fell 0.1% against the Aussie to AUD 1.4579 and rose 0.12% against the Kiwi to change hands at NZD 1.7500.

Reporting by Josh White for Sharecast.com.