Asia markets dip on Iran-Israel conflict, U.S. involvement remains unclear

Asia stock markets in red on Thursday as escalating tensions in the Middle East continued to weigh on market sentiment, following reports that the U.S. is preparing to launch a strike on Iran as early as this weekend.

In response, Iran’s Supreme Leader warned that any U.S. intervention could cause “irreparable damage.” The Israel-Iran conflict has now entered its seventh day, with Israel’s military reportedly striking more than 20 targets in and around Tehran, including sites linked to Iran’s nuclear weapons development and missile production.

Gold rose toward $3,380 per ounce on Thursday, paring losses from the previous session, amid persistent geopolitical tensions.

Japan ( NKY:IND ) fell 0.92% to around 38,600, while the broader Topix Index slipped 0.6% to 2,791 on Thursday, ending a three-day winning streak.

The Japanese yen slipped past 145 per dollar on Thursday, nearing three-week lows, as a stronger US dollar exerted pressure.

China ( SHCOMP ) fell 0.68% toward 3,380 while the Shenzhen Component lost 0.1% to 10,165 on Thursday, erasing gains from the previous session, and the offshore yuan stabilized around 7.19 per dollar on Thursday, as investors digested key announcements made at the opening of the 2025 Lujiazui Forum in Shanghai.

Domestically, investor sentiment was further dampened by a lack of fresh policy signals from top regulators speaking at the Lujiazui Forum.

China’s unemployment rate for 16 to 24-year-olds, excluding college students, dropped to an 11-month low of 14.9% in May, data from the National Bureau of Statistics showed on Wednesday.

Markets now turn their focus to the upcoming July Politburo meeting for stronger economic support measures.

Meanwhile, the People’s Bank of China is set to announce its latest loan prime rate decision later this week.

People's Bank of China Governor Pan Gongsheng announced eight initiatives to open China's financial markets and strengthen Shanghai as a global financial center, including a digital yuan operations center.

China will pace the rollout of its remaining consumer goods trade-in subsidies to ensure economic stability and avoid local funding shortfalls, state media Securities Times said Wednesday.

Hong Kong ( HSI ) fell 1.82% to 23,438 in Thursday morning trade, marking their third consecutive decline and moving closer to a two-week low.

The Hong Kong Monetary Authority kept its base rate unchanged at 4.75% on June 19, mirroring the U.S.

Federal Reserve's decision to maintain its benchmark at 4.25%–4.50% for the fourth straight meeting.

India ( SENSEX ) fell 0.02% trading around 81,504 in early deals on Thursday, as gains in financial services, auto, and consumer durables offset declines in manufacturing, healthcare, oil & gas, metals, and real estate.

Australia ( AS51 ) fell 0.01% to below 8,520 on Thursday, hitting a two-week low.

The Australian dollar fell to around $0.648 on Thursday, reversing strong gains from the previous session, with investors showing little reaction to the latest labor market report.

Australia's unemployment rate remained steady at 4.1% —unchanged for the third consecutive month and in line with market forecasts, but the job figures disappointed.

Total employment fell by 2,500 to 14.62 million, defying expectations of a 25,000 increase and marking the first monthly drop since February.

In the U.S., on Wednesday, all three major indexes ended flat after Fed Chair Powell struck a cautious tone on inflation, even as the central bank held rates steady for the fourth straight meeting, as expected.

U.S. stock futures edged lower Wednesday evening ahead of Thursday’s market closure for Juneteenth.

During the regular session, the Dow Jones and S&P 500 slipped 0.1% and 0.03% , respectively, while the Nasdaq Composite gained 0.13% .

Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ).

More on Asia: Australian jobless rate steady at 4.1%, but employment sees unexpected drop Japan's exports dip, imports slump amid tariff pressures; machinery orders weaken Asian markets mostly lower as Trump urges evacuation of Tehran, Japan U.S. fail to reach deal BoJ stands pat on interest rate; Tokyo and Washington fail to reach trade deal China's retail sales fastest in year, industrial output weakest in six months; jobless rate dips.

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