(Sharecast News) - Asia-Pacific markets were mixed on Wednesday as investors assessed the latest developments in US-China trade tensions and reacted to Wall Street's overnight gains.
While most major indices in the region saw modest gains, China's markets struggled as they resumed trading after the lengthy Lunar New Year holiday.
"Following the Lunar New Year holidays, China's stock market saw a decline on Wednesday, while Asian shares experienced an increase for the second consecutive day," said TickMill market strategy partner Patrick Munnelly.
"After Alphabet and AMD suffered losses during after-hours trading, contracts for US and European stocks also fell. Increased demand for safe-haven assets propelled gold to a record high, and the yen gained strength against the dollar.
"Asian tech stocks mirrored the upward movement of their US counterparts, even as investor sentiment turned cautious regarding China, which retaliated shortly after the US imposed a 10% tariff on all imports from the country."
Munnelly noted that the opening moves in the latest US-China trade conflict indicated that Chinese president Xi Jinping was adopting a "more conservative stance" compared to Trump's first term.
"The yen appreciated in value due to solid domestic wage data and official comments about inflation, raising expectations that the Bank of Japan would continue increasing interest rates.
"Fears that the trade war could impede global economic growth overshadowed the announcement of stricter sanctions on Iran, resulting in a slight decline in commodities like oil."
Markets manage some gains, China struggles after holiday
In Japan, the Nikkei 225 edged up 0.09% to 38,831.48, supported by strong performances from Bandai Namco, which surged 13.73%, and Panasonic, which gained 13.66%.
The broader Topix index rose 0.27% to 2,745.41.
South Korea's Kospi 100 advanced 1.23% to 2,508.99, lifted by a 9.23% jump in KakaoPay and strong gains in Kumyang and KakaoBank.
China's Shanghai Composite fell 0.65% to 3,229.49 as key stocks, including Suzhou Xingye Materials Technology, dropped by their daily limit.
The Shenzhen Component managed a slight 0.08% gain, but broader sentiment remained weak following China's announcement of retaliatory tariffs on US imports.
Hong Kong's Hang Seng Index also declined, losing 0.93% to 20,597.09, with significant losses from Nongfu Spring, Shenzhou International Group, and Trip.com.
Down under, Australia's S&P/ASX 200 climbed 0.51% to 8,416.90, driven by gains in Insignia Financial and BWP Trust.
However, New Zealand's S&P/NZX 50 slipped 0.47% to 12,844.59, dragged down by declines in Serko and Fisher & Paykel Healthcare.
In currency markets, the dollar was last down 1.09% on the yen to trade at JPY 152.66, as it weakened 0.54% against the Aussie to AUD 1.5903, and retreated 0.72% from the Kiwi to change hands at NZD 1.7567.
Oil prices fell, with Brent crude futures last down 0.8% on ICE to $75.60 per barrel, and the NYMEX quote for West Texas Intermediate dropping 0.83% to $72.12.
China's service sector growth slows, Korean inflation tops forecasts
In economic news, China's services sector expanded at a slower pace in January as weaker domestic demand and seasonal effects weighed on growth.
The Caixin/S&P Global services purchasing managers' index (PMI) slipped to 51.0 from December's 52.2, remaining in expansion territory but signaling a loss of momentum.
That decline was driven by softer new business growth and the sharpest contraction in employment since April 2024, as some businesses, particularly in hospitality, temporarily closed for the Lunar New Year holiday.
Backlogs of work also fell for the first time in six months, pointing to improved efficiency but also waning demand.
The slowdown in services mirrored broader economic weakness, with manufacturing also underperforming.
Despite Beijing's late-2024 stimulus measures, their impact had been limited, raising expectations for further policy support.
Trade tensions with the US continued to pose challenges, with Washington imposing new tariffs and Beijing responding with countermeasures.
In South Korea, inflation exceeded expectations in January, with the consumer price index rising 0.7% from the previous month and 2.2% year-on-year, surpassing the 1.97% forecast.
The increase was driven by higher costs for household goods, food, beverages, clothing, and utilities, according to data from Statistics Korea.
Elsewhere, Indonesia's economy expanded by 5.03% in 2024, slightly above forecasts of 4.98%, though marginally slower than the 5.05% growth recorded the prior year.
Fourth-quarter GDP rose 5.02% year-on-year, supported by strong exports of goods and services, according to data from Statistics Indonesia.
The steady growth underscores the resilience of Southeast Asia's largest economy despite global economic uncertainties.
Reporting by Josh White for Sharecast.com.
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