Asian Markets Wrap | Nikkei rallies near record high | All eyes on FED decision

17 Jun 2026 , 07:41 PM

China | Shanghai Composite | 4,108.08 | +0.40%
Mainland China edged higher, diverging from Hong Kong as the CSI 300 advanced on domestic policy optimism. The Shanghai Composite held above 4,100, with industrial and technology names providing the primary lift.

Japan | Nikkei 225 | 69,902.03 | +0.72%
Tokyo added 0.72%, pushing the Nikkei within touching distance of the historic 70,000 level as technology and export names continued to attract buying. The Topix rose 1.36%, outperforming the Nikkei as broader market participation widened beyond the AI-heavy names.

South Korea | KOSPI | 8,864.24 | +1.58%
Seoul’s KOSPI extended its recovery for a seventh session, with semiconductor names continuing to lead as the AI memory shortage narrative provided fundamental support beneath the technical bounce. The index has now regained over 18% from its June 8 circuit-breaker low.

Hong Kong | Hang Seng Index | 24,312.17 | -0.74%
Hong Kong slipped for a second consecutive session, weighed by the overhang of China’s disappointing May economic data from Tuesday and profit-taking in technology counters after their recent recovery.

India | Nifty 50 | 24,085.70 | +0.40%
India’s Nifty 50 crossed 24,000 for the first time since the Iran conflict began — a psychologically significant milestone — as the combined tailwind of lower oil, a stronger rupee, and RBI rate-cut expectations sustained the fourth consecutive session of gains.

 

Key News and Impact on India

1. Fed Decision Day — Rate Hold Expected, Kevin Warsh’s Tone is the Real Story

• The Federal Reserve is set to conclude its two-day meeting on Wednesday and is widely expected to leave interest rates unchanged, with focus squarely on Fed Chair Kevin Warsh’s outlook for the economy and interest rates.
• Markets are parsing Warsh’s language carefully for any signal on whether the hot May CPI print of 4.2% — which had briefly revived rate hike fears — has changed the Fed’s reaction function or whether the central bank remains content to hold and observe
• A neutral-to-dovish Warsh press conference — acknowledging that energy-driven inflation is likely to reverse as the Iran deal takes hold — would be the most positive outcome for global risk assets and emerging market currencies including the rupee
• A hawkish tone — emphasising sticky core inflation and the risk of second-round price effects — would revive rate hike fears, strengthen the dollar, and put renewed pressure on emerging market currencies and bond markets
• Wall Street’s overnight performance ahead of the Fed decision — the Dow gaining 0.17% and S&P gaining 0.08% per the watchlist — suggests markets are positioned for a neutral outcome rather than a hawkish surprise

Impact on India: The Fed decision on Wednesday evening is the most important near-term external event for Indian markets. A neutral hold with a dovish lean would allow the RBI to proceed confidently with rate cuts at its next meeting, reinforce the rupee’s recent strength, and support FII re-engagement with Indian equities. A hawkish surprise would do the opposite — tightening the external constraint on RBI policy, strengthening the dollar, and potentially reversing some of the FPI inflow momentum that India is beginning to attract post-Iran deal. For Indian bond markets in particular, the Fed’s forward guidance on rates matters more than the rate decision itself — US Treasury yield direction has a direct read-through to Indian sovereign bond pricing.

2. Iran Deal Signing Scheduled for Friday in Switzerland — Hormuz Reopening Framework on Track

• Attention turns to Friday’s official signing ceremony in Switzerland and the subsequent negotiations that will focus on the fate of Tehran’s nuclear programme and a plan for the lifting of international economic sanctions.
• Tuesday’s optimism was ramped up by a report in the Wall Street Journal that Washington could ease sanctions on Iranian crude as part of the deal to end the war, allowing Tehran to immediately sell crude and refined oil products.
• Oil prices edged up in early Asian trading on Wednesday after the prior session’s 5%-plus plunge, reflecting some residual uncertainty about whether Friday’s signing would proceed without complications — a reminder that multiple previous ceasefire frameworks during this conflict have been announced and then disrupted
• The Strait of Hormuz reopening framework, included in the 14-point draft MoU, is the element of the deal that matters most for energy markets — its implementation timeline will determine how quickly global oil supply normalises and how much of the recent price decline proves durable
• Focus also shifted to the subsequent phase of negotiations — the nuclear programme discussions and sanctions relief sequencing — which are likely to be more contentious and drawn-out than the initial ceasefire and Hormuz reopening steps

Impact on India: Friday’s signing ceremony in Switzerland is the single event India’s policymakers, RBI, and capital markets are most focused on this week. A successful signing formalises what the market has already begun to price — oil at $80, a stronger rupee, lower inflation, and RBI rate-cut room — turning what is currently an anticipation trade into a confirmed macro reality. For India’s Finance Ministry, Iranian crude sanctions relief is particularly relevant: India has historically been one of Iran’s largest oil customers, and the ability to resume purchases of discounted Iranian crude — once sanctions are lifted — would meaningfully reduce India’s average crude import cost below the current market benchmark price. The sequencing of sanctions relief will therefore be watched closely in Delhi beyond just the immediate peace deal headlines.

 

3. Nikkei 225 Rallies Closer to 70,000, Marking Historic Market Momentum

• Japan’s Nikkei 225 advanced 0.72% to 69,902.03, bringing it within 100 points of the 70,000 milestone that would represent another historic record for the index following Tuesday’s brief intraday breach
• The Topix’s 1.36% gain outpaced the Nikkei, reflecting broader market participation beyond the AI and tech-heavy names that have driven much of the headline index’s recent gains — a constructive sign for the sustainability of Japan’s rally
• SoftBank Group continued its recovery, extending gains as the AI infrastructure investment narrative remained intact and the Iran deal removed the geopolitical risk premium that had been suppressing valuations at the conglomerate’s portfolio holdings
• The yen’s trajectory following the BoJ’s rate hike to 1% is a key watch point — the currency has not strengthened as dramatically as some carry trade unwinding models had predicted, suggesting that the hike was well-telegraphed and absorbed without the disruptive capital repatriation that a surprise hike might have triggered
• Australia’s RBA held rates at 4.35% on Tuesday, providing a neutral read from Asia’s most important commodity-linked market and adding to the sense of regional monetary policy stability amid the Iran deal euphoria

Impact on India: The Topix outperforming the Nikkei is a meaningful technical signal — it suggests that Japan’s rally is broadening from AI concentration into financials, industrials, and domestic demand names, which is typically associated with more durable bull markets rather than narrow momentum moves. For India, a durable Japanese bull market reduces the risk of a sudden Japanese equity reversal pulling global risk appetite lower. The yen’s orderly behaviour post-BoJ hike is also reassuring — a disorderly yen strengthening would have triggered the carry trade unwind that poses the greatest near-term risk to FPI flows into Indian markets.

 

4. KOSPI Extends Recovery to Seventh Session — Samsung Approaches All-Time High

• South Korea’s KOSPI advanced 1.58% to 8,864.24, extending its recovery from the June 8 circuit-breaker low for a seventh consecutive session and bringing the cumulative rebound to over 18%
• Samsung Electronics advanced as the company approaches its all-time high, following a series of sessions in which its stock has recovered from the dramatic June 8 collapse that saw it fall over 10% in a single day
• SK Hynix also continued to climb as the AI memory shortage narrative — confirmed by Nvidia’s CEO and supported by cloud providers locking in HBM capacity through 2028 — remains the fundamental engine beneath Korea’s semiconductor recovery
• The Kosdaq small-cap index showed more mixed performance than the large-cap KOSPI, reflecting that the rally’s leadership remains concentrated in the heavyweight chipmakers rather than having fully broadened to the wider Korean growth stock universe
• South Korea’s financial regulators continue their joint FX bank inspections — launched on June 10 in response to the extreme market volatility — with no adverse findings reported publicly, providing a degree of institutional reassurance to domestic and foreign investors

Impact on India: Korea’s continued recovery is a constructive backdrop for Indian markets. As noted in prior sessions, sustained KOSPI recovery reduces contagion risk, validates the AI demand cycle that underpins Indian IT services revenue, and reduces the urgency of global risk-off positioning that pulls capital from emerging markets. The KOSPI’s 18% recovery in seven sessions from its circuit-breaker low also serves as a useful data point for Indian investors assessing how quickly markets can recover from geopolitically-driven dislocations — a lesson applicable to Indian equities’ own Iran-conflict discount, which is now actively unwinding.

 

5. India Crosses 24,000 — Nifty at Strongest Level Since Iran Conflict Began

• India’s Nifty 50 crossed the 24,000 mark during Wednesday’s session, reaching its strongest level since the outbreak of the Iran-US conflict on February 28 — a milestone that confirms the full unwinding of the conflict-era equity discount India had been carrying
• The move above 24,000 was driven by a fourth consecutive session of domestic institutional buying, continuing FPI re-engagement, and the fundamental macro tailwinds of oil at $80, a stronger rupee at 94.71, and growing RBI rate-cut expectations
• Nifty Bank continued to lead sectoral performance, with the banking index reflecting the market’s conviction that lower oil leads to lower inflation, which leads to RBI rate cuts, which improve credit conditions and net interest margin outlooks for Indian lenders
• IT stocks remained the notable underperformer within an otherwise broadly positive market — the sector’s structural adjustment to AI disruption of traditional outsourcing models is a headwind that the geopolitical relief rally does not resolve
• The rupee’s sustained strength near 94.71 against the dollar is adding a secondary positive signal — a strong rupee reduces imported inflation directly, improves the RBI’s flexibility, and signals improving confidence in India’s external account trajectory

Impact on India: The Nifty crossing 24,000 is not just a price milestone — it represents the market’s collective judgment that India’s macro trajectory has shifted from deterioration to improvement. Four months of Iran-driven oil pressure, FPI outflows, and RBI constraint are giving way to a new phase defined by lower energy costs, currency stability, and monetary easing room. The sustainability of this shift depends on two events in the next 48 hours: Friday’s Iran deal signing in Switzerland and the Fed’s Wednesday evening press conference. If both go well — deal signed without complications, Fed signals patience on rates — India enters the second half of 2026 with the most supportive external environment it has seen since early 2025. Read more on Indian Markets here.