China, Japan, and South Korea Stocks Diverge at Close: South Korea Surges 2% to Lead Asia-Pacific, Japan Follows, Why Is the Chinese Market Relatively Restrained?

TradingKey - Against the backdrop of rising expectations for an easing in U.S.-Iran tensions, Asia-Pacific stock markets generally closed higher on Wednesday, though performance diverged significantly across China, Japan, and South Korea.

The South Korean stock market delivered the strongest performance, with the KOSPI index surging 2.07% to lead the Asia-Pacific region; Japan's Nikkei 225 index rose approximately 0.44%, extending its recent rebound; in contrast, the Chinese market remained relatively restrained, showing limited gains amid weakening external demand.

Source: TradingView

The core driver of the market today was a temporary cooling of geopolitical risks. As the U.S. signaled a willingness to restart negotiations with Iran, concerns over further escalation of the Middle East conflict eased, causing international oil prices to retreat and providing broad support for risk assets. In this context, the South Korean market, which is highly sensitive to the external environment, was the first to react, with significant capital inflows driving the index sharply higher.

The Japanese market benefited more from improved macroeconomic expectations brought about by the pullback in oil prices. As an energy importer, Japanese companies are sensitive to changes in energy costs; lower oil prices help alleviate imported inflationary pressures, thereby enhancing market expectations for corporate earnings and pushing the Nikkei index steadily upward.

Regarding the Chinese market, although the external risk environment improved marginally, fundamental factors continued to act as a constraint. Latest data showed that China's export growth slowed to 2.5% in March, indicating a loss of momentum in external demand. Against this background, overall market sentiment was cautious, and the index remained relatively stable, failing to follow the significant rebounds in Japanese and South Korean markets.

Overall, Asia-Pacific stock markets today displayed a typical "rebound driven by risk mitigation" pattern, yet different markets reacted differently to the same macroeconomic variables. South Korea and Japan were quicker to convert improved sentiment into market gains, while the Chinese market was more influenced by its own economic data, resulting in a relatively moderate performance.