Asian Shares Reverse Losses As Oil Slips On US Stock Build

(RTTNews) - Asian stocks ended flat to slightly higher in cautious trade on Wednesday as oil prices pulled back from recent highs and investors braced for a closely watched Federal Reserve rate decision later in the day.

Markets currently assign roughly a 92 percent probability to a quarter-point increase, which would lift the federal-funds target range from 3.75-4.00 percent to 4.00-4.25 percent.

That would mark the Fed's first hike since 2023. It is believed a surprise hold or strong dovish dissent could have a materially negative impact on markets.

It remains to be seen whether the policy statement, updated projections and Chair Kevin Warsh's press conference would support market expectations for extended hikes. The U.S. dollar held gains to hover near a two-week high after the yield on the U.S. 10-year Treasury bond breached the 5 percent mark on Tuesday for the first time in three years.

Gold jumped nearly 1 percent to $4,337 an ounce after a two-day drop. Oil prices fell more than 1 percent in Asian trade after industry data showed an unexpected build in U.S. crude inventories.

Both Brent and WTI contracts settled more than $3 higher at their highest levels since May 19 on Tuesday amid expectations of a prolonged disruption of Saudi Arabian oil flows to its Red Sea coast following last week's drone attack on its east-west pipeline.

Concerns over global oil supplies intensified after Saudi Arabia suspended Yanbu oil loadings and cancelled some cargo deliveries to European customers.

China's Shanghai Composite reversed course to end 0.71 percent higher at 3,891.60 after reports emerged that the United States and China are in discussions to reduce tariffs on select goods under a proposed $30-billion reciprocal tariff package.

Hong Kong's Hang Seng index edged up 0.19 percent to 24,713.78 ahead of a planned Trump-Xi meeting later this month.

Japanese markets recovered from an early slide to end notably higher amid bets that recent gains in the yen will be short-lived.

The Nikkei average rose 0.69 percent to 63,923, marking its first gain in four sessions. The broader Topix index settled 0.61 percent higher at 4,061.72. While energy producer Inpex rallied 3.2 percent, tech stocks such as SoftBank Group and Kioxia fell around 2 percent each.

Seoul stocks rebounded from morning lows to finish higher, led by tech heavyweights Samsung Electronics and SK Hynix. The Kospi index surged 1.37 percent to 6,717.97 after SK Hynix production workers approved a revised labor agreement.

Australian markets eked out modest gains as higher metals prices helped mining stocks recover from recent losses. The benchmark S&P/ASX 200 rose 0.28 percent to 8,696.50 while the broader All Ordinaries index closed 0.28 percent higher at 8,874.50.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 index surged 1.03 percent to 13,622.72, snapping a four-day losing streak ahead of the release of Q2 GDP data.

U.S. stocks ended lower overnight on concerns about the outlook for inflation, interest rates and the U.S. government's massive debt level.

The benchmark 10-year Treasury yield briefly touched 5.041 percent, its highest level since July 2007, while oil prices hit four-month highs after reports of fresh Houth strikes on Saudi Arabia.

While the S&P 500 declined half a percent to its lowest closing level in over a month, the Dow fell 0.6 percent and the tech-heavy Nasdaq Composite shed 0.8 percent.