FX.co ★ Asian Markets Trade Mostly Lower

Asian stock markets are mostly trending lower on Tuesday, reflecting mixed signals from Wall Street overnight. Uncertainty surrounding interest rate prospects continues, as some US Federal Reserve officials warn that further rate hikes may be necessary if inflation persists. Traders are also showing caution ahead of the release of the minutes from the latest Federal Reserve meeting. Notably, Asian markets closed mostly higher on Monday.

Despite the high probability of interest rates dropping by September, the likelihood has decreased to 76.3% from nearly 90% last week, based on CME Group's FedWatch Tool.

The Australian stock market opened in the green but is slightly lower on Tuesday, with the benchmark S&P/ASX 200 Index currently below the 7,900 mark. Weakness in iron ore miners and energy stocks is partly offset by gains in technology stocks. The S&P/ASX 200 Index is down 11.40 points, or 0.15%, at 7,852.30, with an intraday high of 7,870.20 and a low of 7,844.40. The broader All Ordinaries Index is down 8.90 points, or 0.11%, at 8,123.20. Australian stocks saw significant gains on Monday.

Among major miners, Rio Tinto is down nearly 1%, Fortescue Metals has edged down by 0.4%, and Mineral Resources is declining by over 1%. Conversely, BHP Group has gained 0.5%.

In the oil sector, Origin Energy is up by 0.2%, while Beach Energy is down almost 1%, and Santos has marginally decreased by 0.1%. Woodside Energy remains unchanged.

Tech stocks are performing relatively well, with Block (Afterpay owner) and WiseTech Global each gaining over 1%. Xero is up nearly 1%, while Zip is down more than 1%, and Appen remains flat.

Gold miners show mixed performance: Gold Road Resources and Resolute Mining have edged up by 0.3% to 0.4%, while Newmont and Northern Star Resources have decreased by 0.1% to 0.3%. Evolution Mining has gained nearly 1%.

Among the big four banks, Commonwealth Bank, National Australia Bank, and Westpac have each edged down by 0.2% to 0.3%, while ANZ Banking is up by 0.3%.

In other significant developments, Sonic Healthcare's shares plummeted by over 10% after the diagnostics giant flagged lower-than-expected profit due to inflation and currency exchange challenges. Meanwhile, James Hardie’s shares plunged nearly 11% following below-expectation earnings guidance for fiscal 2025. Star Entertainment's shares fell over 5% after Hard Rock International denied involvement in any proposal related to the struggling casino group.

Economic news indicates that Australia’s economy is slowing, with inflation decreasing less than anticipated. Minutes from the Reserve Bank of Australia's May 7 meeting suggest a potential need for a higher cash rate to mitigate disinflation. The RBA policy board maintained its benchmark interest rates, keeping the cash rate target at 4.35% and the interest rate on Exchange Settlement balances at 4.25%.

In the currency market, the Aussie dollar is trading at $0.665 on Tuesday.

Japan's stock market saw modest gains on Tuesday, with the Nikkei 225 moving above the 39,100 level. The benchmark Nikkei 225 Index closed the morning session at 39,135.91, up 66.23 points or 0.17%, having reached a high of 39,346.15 earlier. Japanese shares had also ended significantly higher on Monday.

Market heavyweight SoftBank Group edged up 0.5%, and Uniqlo operator Fast Retailing increased by 0.4%. In the automotive sector, Honda declined nearly 1%, and Toyota edged down by 0.2%.

In the tech sector, Advantest gained over 2%, Tokyo Electron advanced nearly 1%, and Screen Holdings edged up by 0.1%.

In the banking sector, Sumitomo Mitsui Financial edged down by 0.1%, Mitsubishi UFJ Financial fell nearly 1%, and Mizuho Financial declined by over 2%.The performance of major exporters displayed mixed results. Panasonic, Canon, and Sony each saw slight declines ranging from 0.1 to 0.5 percent, whereas Mitsubishi Electric experienced a minor uptick of 0.1 percent. Noteworthy gainers included MS&AD Insurance, which soared nearly 16 percent, Tokio Marine, up almost 5 percent, and Fujikura, ascending over 4 percent. Additionally, ENEOS Holdings, Isetan Mitsukoshi, Tokyo Electric Power, Sharp, Alps Alpine, Disco, and Mitsui Mining & Smelting each rose by more than 3 percent, while NTN advanced close to 3 percent.

On the flip side, Sompo Holdings declined by 4.5 percent and Daikin Industries decreased by nearly 4 percent. Other decliners, such as Mercari, Shiseido, Sumitomo Pharma, Rakuten Group, and T&D Holdings, each fell by roughly 3 percent.

In the currency market, the U.S. dollar was trading in the lower 156 yen range on Tuesday.

Across Asia, Hong Kong saw a 1.7 percent decline. Markets in New Zealand, China, South Korea, Singapore, Malaysia, and Taiwan were all down by between 0.3 and 0.5 percent each, while Indonesia remained relatively flat.

Over on Wall Street, the stock performance was mixed throughout Monday’s trading session following an initial rise. The tech-focused Nasdaq extended its previous week's strong gains, achieving a new record closing high, while the Dow pulled back after surpassing the 40,000 mark last Friday. Specifically, the Nasdaq rose by 108.91 points, or 0.7 percent, to close at 16,794.87. The S&P 500 inched up by 4.86 points, or 0.1 percent, to 5,308.13. Conversely, the Dow Jones Industrial Average fell by 196.82 points, or 0.5 percent, ending at 39,806.77.

In Europe, major markets moved upward. The U.K.'s FTSE 100 Index edged up by 0.1 percent, while both Germany’s DAX Index and France's CAC 40 Index climbed by 0.4 percent.

Crude oil prices settled lower on Monday amid concerns that the Federal Reserve may maintain elevated interest rates for an extended period. West Texas Intermediate Crude futures fell to approximately $79.80, a reduction of $0.26 from their previous close.