US inflation heated up, with the 30-year US Treasury yield once rising 4 bps to 5.16%, marking a new high since October 2023. Coupled with discussions between the US and Israel on resuming military action against Iran, escalating geopolitical tensions weighed on major Asia-Pacific equity markets this morning (18th). The KOSPI once fell nearly 5% before reversing to trade higher.

Mainland China's "three engines" data all came in below expectations. After opening lower, the Shanghai Composite Index and Shenzhen Component Index reversed to edge up 0.1% and nearly 0.5% to 4,139 and 15,634, respectively. Hong Kong equities remained under pressure. After opening down 123 pts, the HSI extended losses, once sliding 433 pts to a trough of 25,529. It was last at 25,539, down 422 pts or 1.6%, with turnover of HKD127.877 billion. Taiwan stocks opened 76 pts lower before losses widened sharply. The index once plunged 1,002 pts to a trough of 40,170, before narrowing losses to 522 pts or nearly 1.3% at 40,649. TSMC and Hon Hai fell 1.6% and 0.2%, respectively.

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Amid market concerns over Japan's fiscal deterioration and a sell-off in government bonds, Japan's 10-year government bond yield once climbed to 2.8%, the highest in about 29 years. After opening down 109 pts, the Nikkei index once slumped 1,032 pts in early trading to 60,376, before trimming losses to close the half-day at 60,843, down 566 pts or 0.9%. Auto stocks Nissan, Toyota and Honda fell between 2.9% and 6.4%. TEPCO dropped 3.6%. Mizuho Financial Group slid 7.4%, while Mitsubishi UFJ Financial Group bucked the trend to rise 3.6%.

Following a 6.1% plunge last Friday, South Korea's KOSPI opened 0.7% lower this morning and once fell 350 pts or 4.7% to 7,142 in early trading, before staging a sharp rebound to rise 88 pts or 1.2% to 7,582. The two heavyweight stocks swung higher. Samsung Electronics once fell 3.1% but is now up 5.9%, after the South Korean prime minister said all possible measures would be used to avoid strikes. SK Hynix once dropped 4.8% and is now up 3%. Nomura said in a report that memory stocks are undergoing valuation re-rating driven by rising AI demand. It raised Samsung Electronics' TP sharply to KRW590,000 from KRW340,000 and lifted SK Hynix's TP to KRW4,000,000 from KRW2,340,000, maintaining Buy ratings for both.

Among other major markets, Indonesia's IDX resumed trading after a long holiday and plunged 3.5% to 6,489, a more than one-year low. Australia's S&P/ASX 200 and New Zealand's NZX 50 fell 1.3% and 1.1%, respectively. Singapore equities, Malaysia's KLCI and the Philippines' PSEI declined 0.4% to 0.6%. Vietnam's Hanoi Index rose 1%, while the Ho Chi Minh Index slipped 0.3%.(da/u)

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