Asia-Pacific markets fell on Friday as rising oil prices and escalating tensions between the United States and Iran kept investors cautious, while mixed economic data across the region provided little support for risk appetite.
By 12:15 pm AEST (2:15 am GMT), Australia's S&P/ASX 200 was trading 0.5% lower, Japan's Nikkei 225 had dropped 2.9%, and South Korea's KOSPI 200 was down 3.8%.
Technology stocks were among the biggest decliners across the region. SK Hynix shares fell 5.3% in Seoul amid a broader sell-off in Asian chipmakers and following a Bloomberg report that the company had reached the 2.5% cap on converting local shares into U.S. American Depositary Receipts.
Japan's inflation data showed headline consumer prices rose to 1.7% in June from 1.5% in May.
Core inflation increased 1.6%, while the so-called "core-core" inflation measure, which excludes fresh food and energy prices, eased to 1.7%, marking its lowest level since August 2022.
Meanwhile, S&P Global's flash Purchasing Managers' Index (PMI) data showed improving business activity in Australia, with both manufacturing and services sectors expanding at a faster pace in July.
Australia's manufacturing PMI rose to 51.7 from 51.5, while services PMI climbed to 53.0 from 50.5.
S&P Global said the Australian private sector recorded its first increase in new business in five months during July, supported by improving demand conditions.
The stronger activity backdrop boosted output growth, recruitment activity and companies' ability to protect profit margins, while input cost pressures eased.
Japan's PMI readings were weaker but remained in expansion territory.
Manufacturing PMI slipped slightly to 54.7 from 54.8, while services PMI declined to 51.9 from 52.2.
S&P Global noted that overall activity in Japan increased at its fastest pace since February, driven by the strongest rise in manufacturing production since February 2014.
However, services growth moderated, employment gains were broadly unchanged, and business confidence weakened. Input costs continued to rise sharply, although inflation eased to a three-month low.
The weaker regional sentiment followed losses on Wall Street overnight. The Dow Jones Industrial Average fell 1%, the S&P 500 declined 1.2%, and the Nasdaq Composite dropped 2.2% as investors digested technology earnings and the latest surge in oil prices.
In commodities, ICE Brent crude surged 7% to US$100.69 a barrel, its highest level since 22 May, after renewed Middle East tensions raised concerns over global energy supplies. Spot gold declined 2% to settle at US$4,048.86 an ounce.
Chinese markets bucked the broader regional weakness on Thursday. The Shanghai Composite Index gained 0.3% to 3,876.8, while the CSI 300 rose 0.2% to 4,728.0.
Hong Kong's Hang Seng Index advanced 1.3% to 25,210.8, while India's BSE Sensex declined 0.5% to 76,391.4.
European markets ended broadly lower on Thursday. The UK's FTSE 100 fell 0.7% to 10,639.2, Germany's DAX declined 1.6% to 24,763.1, and France's CAC 40 slipped 1.6% to 8,299.1.
