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Asian equity markets opened mixed on Tuesday, tracking US stock index futures, as investors remain cautious ahead of US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz. At the time of writing, Japan’s Nikkei 225, Thailand's SET Index, Indonesia's IDX Composite, and Malaysia's KLCI index are experiencing some downward pressure, while South Korea’s Kospi and Australia's S&P/ASX 200 are trading with modest gains.
Trump heightened a harsh rhetoric against Iran and threatened to decimate civilian infrastructure if the deadline of Tuesday, 8 PM Eastern Time (00:00 GMT Wednesday) passes without a deal. Iran, on the other hand, pushed back against pressure to reopen the strategic waterway and rejected a ceasefire proposal, instead insisting on a permanent end to the conflict. This raises the risk of a further escalation of conflict in the Middle East and keep nervy investors on the sidelines.
Meanwhile, geopolitical uncertainties push Crude Oil prices to a fresh four-week top and back the case for a further move up, fueling inflationary concerns and bolstering bets for more hawkish central banks globally. Furthermore, traders are pricing in the possibility of a rate hike by the US Federal Reserve (Fed) by the end of this year. This turns out to be another factor weighing on investors' sentiment and might keep a lid on any optimism in the markets, warranting caution for bulls.
The market attention now shifts to the release of the latest US consumer inflation figures, due on Friday, which will include the Middle East conflict period and allow investors to assess the effects of surging Oil prices. The focus, however, will remain glued to geopolitical developments amid fading hopes for a last-minute agreement between the US and Iran. The failure to reach a deal would likely trigger a new phase of US military action and trigger a fresh wave of the risk-aversion trade.
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
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Asian equity markets opened mixed on Tuesday, tracking US stock index futures, as investors remain cautious ahead of US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz.
周二亚洲交易时段，欧元/美元在1.1530附近小幅下跌，但整体走势横盘，在周一的交易区间内震荡。
The EUR/USD pair ticks marginally lower around 1.1530 during the Asian trading session on Tuesday, but is broadly sideways, wobbling inside Monday’s trading range.
英镑/美元回吐前一日的部分涨幅，周二亚洲时段交投于1.3220附近。由于中东和平停火不确定性引发的避险情绪升温，美元走强，导致该货币对走弱。
美元指数（DXY），衡量美元（USD）相对于六种主要世界货币篮子的价值，目前在周二亚洲交易时段交易于100.10附近
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 100.10 during the Asian trading hours on Tuesday.
GBP/USD pares its recent gains from the previous day, trading around 1.3220 during the Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) gains ground amid increased risk aversion, which could be attributed to the Middle East peace truce uncertainty.
周二亚洲时段，纽元/美元在0.5700附近吸引了一些卖盘。由于中东局势不确定性加剧，推动避险货币需求，美元（USD）兑纽元（NZD）走强。
The NZD/USD pair attracts some sellers to around 0.5700 during the Asian trading hours on Tuesday. The US Dollar (USD) strengthens against the New Zealand Dollar (NZD) as heightened uncertainty in the Middle East boosts demand for a safe-haven currency.