Asian Stocks Mixed as BOJ Inflation Signal Offsets Relief Over Trump’s Iran Delay

Asian stocks were mostly higher on Friday as markets welcomed short-term relief after U.S. President Donald Trump delayed a decision on whether the U.S. will join the escalating Israel-Iran conflict. However, Japanese shares underperformed due to stronger-than-expected inflation data and growing expectations of interest rate hikes by the Bank of Japan.

The Nikkei 225 and TOPIX slipped 0.1% and 0.3% respectively, pressured by a strengthening yen and concerns over future monetary tightening. Japan’s core CPI for May jumped to its highest level in nearly two and a half years, while underlying inflation also hit a one-year peak. The data, alongside hawkish BOJ meeting minutes, fueled speculation that the central bank could raise rates as soon as July.

In contrast, tech-heavy Asian markets rebounded. South Korea’s KOSPI surged 1.1%, reaching a two-year high, and Hong Kong’s Hang Seng gained 0.8% on revived risk sentiment. U.S. markets remained closed for the Juneteenth holiday, but S&P 500 Futures fell 0.3% in Asian trade, still weighed by the Federal Reserve’s hawkish tone and reduced rate cut projections for 2026.

China’s Shanghai Composite and CSI 300 inched up 0.1% and 0.3% respectively, showing muted response to the PBOC’s decision to keep its loan prime rate steady. However, expectations remain for further easing this year to combat sluggish growth.

Australia’s ASX 200 dipped 0.5%, while Singapore’s Straits Times rose 0.1%. India’s Gift Nifty 50 Futures edged up 0.2%, indicating a positive start for local markets.

Geopolitical tensions and central bank actions continue to drive regional sentiment, with investors closely watching inflation trends and monetary policy signals.