Oil prices retreat, Asian stock markets continue to rise; concerns over Iran war persist

Investing.com - On Wednesday, most Asian stock markets continued their moderate gains as oil prices retreated from recent highs. However, investors remain cautious ahead of ongoing geopolitical tensions and key US inflation data releases.

Wall Street indices closed roughly flat overnight, and as of 02:40 GMT, futures linked to these indices edged higher in Asian trading.

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Nikkei and KOSPI lead gains amid falling oil prices

After sharp fluctuations in the global energy markets caused market turbulence earlier this week, regional stock markets edged higher. The decline in oil prices eased investor concerns, which had been driven earlier this week by fears of escalating conflicts involving the US, Israel, and Iran.

The Wall Street Journal reported that the International Energy Agency proposed the largest-ever strategic oil reserve release to help stabilize the market and offset supply disruptions caused by the conflicts.

Fears of continued shipping disruptions through the Strait of Hormuz pushed oil prices close to $120 per barrel. However, after US President Trump indicated that a war with Iran might end soon, oil prices retreated.

On Wednesday, the Nikkei 225 index in Japan rose over 2%, while the broader Topix index increased 1.7%.

The KOSPI in South Korea jumped nearly 4% after gaining over 5% in the previous trading session.

Markets await US CPI data for clues on Federal Reserve rate direction

Despite the decline in oil prices, investor sentiment in Asian markets remains cautious, as there are little signs of substantial easing in Middle East geopolitical tensions.

Earlier oil price surges also heightened concerns about global inflation risks, especially for Asian economies heavily reliant on imported energy.

Investors are now awaiting the US Consumer Price Index (CPI) data due later Wednesday, which could provide further clues on the Fed’s interest rate path.

In China, the Shanghai Composite was flat, while the CSI 300 rose 0.5%. Hong Kong’s Hang Seng Index edged up 0.3%.

Australia’s S&P/ASX 200 increased 0.4%, while Singapore’s Straits Times Index declined slightly by 0.3%.

Futures linked to India’s Nifty 50 rose 0.1%.

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