Asia-Pacific markets trade mixed after Wall Street gains on EU tariff delay

Shanghai urban skyline and the bund, China.

Comezora | Moment | Getty Images

The U.S. stock market rebound is "the calm before a potential storm," Lucy Baldwin, Citi Research global head, told CNBC's "Squawk Box Asia" Wednesday, against the backdrop of U.S. tariffs that have been "slowing growth in the country and raising the level of unemployment."

Consequently, the bank forecasts the U.S. Federal Reserve to ease interest rates by around 125 basis points between July and January next year.

This primes the rest of the world to become "more significant," Baldwin said citing the Japanese market as one such example with a "10% upside into the end of the year". However, she cautioned that the situation in the Asian market could be "complicated" should the Fed ease rates more quickly or more materially than the market is pricing, she added.

Baldwin suggested that investors diversify across and within asset classes, particularly within equity markets.

"We would recommend a fairly broad and balanced portfolio, rather than perhaps a focus on the United States and the exclusion of other markets, which had been something we've been advocating in previous years," she said.

- Penny Chen, Neha Hegde

Chinese fast fashion giant Shein is pursuing a listing in Hong Kong after its planned IPO in London was blocked by Chinese regulators, Reuters reported citing sources familiar with the matter.

Shein is reportedly aiming to submit a draft prospectus to the Hong Kong stock exchange in the coming weeks, and has plans to go public in Hong Kong within the year.

—Reuters, Lee Ying Shan

Japan's bond market is igniting fears of capital flight from the U.S. and a carry trade unwind as long-dated yields hover near record highs.

Yields resumed their move higher Wednesday as demand for 40-year government bonds reportedly dropped to its weakest level since November, according to Reuters' calculations, hovering near record highs hit last week.

Japan 20 year government bond yields in the past year

Japan's 40-year government bonds yields hit an all-time high of 3.689% Thursday and were last trading at 3.318% — almost 70 basis points higher so far this year. Yields on 30-year government debt are up more than 60 basis points this year at 2.914%, also not too far from all-time highs, while for 20-year debt they are up over 50 basis points.

South Korea's benchmark Kospi rose to the highest intraday level since last September, data from LSEG showed.

The index was trading 1.7% higher to lead gains in the region as of 1.26 p.m. local time. This comes ahead of Nvidia's quarterly earnings report which is set to be out Wednesday U.S. time.

Index heavyweights Samsung Electronics and SK Hynix rose 3.06% and 2.59% respectively. Naver rose 2.23%, and LG Energy Solution jumped 4.04%.

The Kospi index has climbed 11.72% year-to-date.

Australia's consumer inflation rose more than expected in April, data released by the Australian Bureau of Statistics showed Wednesday, largely fueled by the seasonal travel demand around holidays and higher private insurance costs.

The consumer price index came in at 2.4%, unchanged from the previous month but hotter than economists' estimate of 2.3% in a Reuters poll.

The Aussie dollar was little changed following the data release, while the benchmark S&P/ASX 200 index was flat.

The Reserve Bank of Australia cut its cash rate by 25 basis point last week to a two-year low of 3.85% in its second reduction this year.

Abhijit Surya, senior Asia-Pacific economist at Capital Economics, reiterated his view that the central bank will ease policy more gradually than markets expect, forecasting a cyclical low of 3.35%, a level notably higher than the 3% terminal rate currently priced in by investors.

— Anniek Bao

New Zealand's central bank expectedly trimmed its benchmark official cash rate by 25 basis points to 3.25% on Wednesday. This marks the sixth straight cut, as easing inflation offered some room for policymakers to cushion the country's ailing economy against global trade disruptions.

The decision was in line with estimates of analysts polled by Reuters.

"Core inflation is declining and there is spare productive capacity in the economy," policymakers said in a statement following the committee's meeting. "These conditions are consistent with inflation returning to the mid-point of 1-3 percent target over the medium term."

The central bank has slashed rates by 225 basis points in this easing cycle since August, according to LSEG data.

The New Zealand dollar strengthened modestly following the announcement to trade at 0.5947 against the greenback.

— Anniek Bao

The three major indexes finished Tuesday's session in the green, snapping four-day losing streaks for the S&P 500 and Nasdaq Composite.

The S&P 500 added around 2.1%, while the Nasdaq jumped 2.5%. The Dow climbed more than 700 points, or 1.8%.

— Alex Harring