Asia report: Markets rebound from Iran conflict losses

(Sharecast News) - Asia-Pacific markets rebounded on Thursday after several days of steep losses, as stabilising oil prices and gains on Wall Street helped improve risk sentiment across the region. South Korean equities led the recovery, with the Kospi jumping as much as 12% during the session after suffering its worst day on record earlier in the week.

Overnight in the United States, stocks rose, building on momentum seen late in the previous session.

"US stocks saw gains as new economic data pointed to a robust services sector and cooling price pressures, helping to ease worries about the intensifying conflict in the Middle East," said Patrick Munnelly, market strategy partner at TickMill.

Market sentiment improved as oil prices began to stabilise and investors assessed efforts by Washington to secure energy flows through the Middle East.

US Treasury secretary Scott Bessent said on Wednesday that the government would roll out a series of measures aimed at stabilising oil shipments through the Persian Gulf, signalling that authorities were prepared to step in as geopolitical tensions threaten one of the world's most critical energy corridors.

Brent crude rose 2.05% to $83.07 a barrel, while West Texas Intermediate climbed 2.61% to $76.61.

Munnelly said the global rebound had been driven by easing market stress after the initial shock of the conflict, noting that "the global stock market rebound made its way to Asia, with South Korea bouncing back from its steepest plunge on record," while markets "began to steady after the turmoil sparked by the Middle East conflict caused shockwaves among investors."

Japan, China equities in the green

In Japan, the Nikkei 225 rose 1.9% to 55,278.06 and the Topix gained 1.9% to 3,702.67.

Inpex Corporation climbed 7.46%, Nippon Electric Glass advanced 7.05%, and Resona Holdings added 6.52%.

Chinese markets also moved higher - the Shanghai Composite rose 0.64% to 4,108.57, while the Shenzhen Component gained 1.23% to 14,088.84.

Suzhou HYC Technology surged 14.75%, FangDa Carbon New Material Co jumped 10.08%, and Tian Jin Global Magnetic Card rose 10.07%.

According to Munnelly, Chinese equities advanced even as policymakers signalled a relatively modest growth outlook, noting that "Chinese stocks posted gains even as the nation set its 2026 GDP growth target at a modest 4.5% to 5% - a pace not seen since 1991."

In Hong Kong, the Hang Seng Index edged up 0.28% to 25,321.34.

AIA Group rose 5.06%, Wharf Real Estate Investment Co gained 3.58%, and Sino Biopharmaceutical advanced 3.5%.

Seoul leads regional gains

South Korea led regional gains, with the Kospi 100 soaring 9.94% to 6,405.53 as investors returned to the market after the previous session's historic sell-off.

Hanwha Systems surged 30%, LIG Nex1 climbed 23.26%, and Hanmi Semiconductor jumped 21.62%.

Munnelly noted that "South Korea's main index surged 11%, recovering from a dramatic 12% drop in the previous trading session," highlighting the scale of the rebound following earlier turmoil.

Sydney rises despite narrower trade surplus

Australian equities also finished higher, with the S&P/ASX 200 rising 0.44% to 8,940.30.

Viva Energy Group gained 11.89%, Magellan Financial Group rose 10.45%, and DroneShield advanced 10.12%.

Economic data from Australia showed the country's trade surplus narrowed unexpectedly in January as weaker exports and a rebound in imports weighed on the external balance.

The seasonally adjusted trade balance fell to AUD 2.63bn from a revised AUD 3.37bn in December, missing expectations for AUD 3.78bn.

Exports declined 0.9% month-on-month after a 0.9% increase previously, reflecting a 5.2% fall in rural goods and a 1.7% drop in non-rural goods.

Iron ore and coal volumes weakened over the month, with hard coking coal shipments falling sharply, although LNG exports edged slightly higher.

Imports rose 0.8% after a 1.8% decline in December, driven largely by a 46.8% surge in non-monetary gold.

Capital goods imports increased 5.1%, while consumption and intermediate goods fell.

In New Zealand, the S&P/NZX 50 rose 0.64% to 13,617.89.

A2 Milk Company gained 3.59%, Sky Network Television climbed 3.57%, and Pacific Edge added 3.54%.

Dollar mixed against regional peers

Currency markets were mixed, with the dollar last up 0.14% on the yen to trade at JPY 157.28.

The greenback also gained 0.4% against the Aussie to AUD 1.4190 and advanced 0.35% on the Kiwi to NZD 1.6892.

Despite the rebound in equities, Munnelly cautioned that geopolitical tensions remained a key source of uncertainty.

"We expect the war in the Middle East to continue driving market volatility in the near term," he said, adding that upcoming economic releases would remain critical for investors assessing the global outlook.

Reporting by Josh White for Sharecast.com.