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Asian Stocks Mixed; Middle East Tensions Escalate

Asian stocks traded mostly lower on Friday morning except for the Chinese stocks.

Investing.com - Asian stocks traded mostly lower on Friday morning, except Chinese stocks. The market watched closely the possible rate cut in the U.S. and the rising tensions in the Middle East.

China’s Shanghai Composite and the Shenzhen Component rose 0.51% and 1.04% respectively by 10:20 PM ET (02:20 GMT),supported by the dovish tone by the U.S. Federal Reserve in its latest policy statement, which signalled a possible rate cut.

The market expects the Fed to cut interest rates to counter the negative impacts of the U.S.-China trade spat on economic growth. Overnight on Wall Street, the S&P 500 jumped 1% to close at a record high.

"There is no doubt that this week's FOMC meeting outcome is positive for the financial markets including those in Asia," Kota Hirayama, senior emerging market economist at SMBC Nikko Securities, told Reuters.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are set to meet at next week’s G-20 meeting to discuss trade issues. Market watchers await clues about new trade deals to see how the market will be affected.

The tensions in the Middle East were also in focus today. Iran shot down a U.S. military drone and escalated the volatile situation between Washington and Tehran. The incident sent the crude oil price higher.

“The key issue that we’re struggling with at the moment is the impact of geopolitics on business confidence,” James Sullivan, head of Asia ex-Japan equity research at J.P. Morgan told CNBC.

Trump tried to downplay the incident by saying he found it “hard to believe” the attack was intentional. “It could have been somebody who was loose and stupid that did it . . . But it was a very foolish move,” he said on Thursday.

Meanwhile, Hong Kong’s Hang Seng Index traded 0.15% lower. Protests continued on Friday over the controversial extradition bill that would allow the autonomous government to send criminal suspects to China.

Elsewhere, Japan’s Nikkei 225 dropped 0.26% and South Korea’s KOSPI slid 0.13%. The Bank of Japan kept monetary policy steady on Thursday.

Down under, Australia’s ASX 200 shed 0.33%.

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