TOKYO (AP) — Asian shares were mixed in cautious trading early Wednesday as investors watched for what might happen on interest rates and the war with Iran pushed oil prices higher.

Japan’s benchmark Nikkei 225 was nearly unchanged at 65,249.95, and South Korea’s Kospi gained 1.2% to 7,041.10.

In Hong Kong, the Hang Seng dipped 0.1% to 25,287.99. The Shanghai Composite gained 0.2% to 3,949.89.

Australia’s S&P/ASX 200 slipped 0.2% to 8,903.20.

Taiwan’s Taiex edged 0.2% higher and the Sensex in Mumbai shed 0.7%.

On Tuesday, U.S. stocks fell as markets reopened after a three-day weekend, with the S&P 500 sinking 0.6%. The Dow Jones Industrial Average dropped 1.2%, and the Nasdaq composite dipped 0.3%.

Markets are feeling the pressure from rising oil prices. Brent crude, the international standard, surged 1.4% to $99.30. It briefly climbed as high as $99.46 overnight.

Benchmark U.S. crude rose 1.2% to $94.17 a barrel.

Increased fighting in the Middle East is constricting the global flow of oil and more costly oil has worsened worries over high inflation.

A closely watched report on U.S. inflation comes on Friday. That update will show how much more people were paying in August for groceries, clothes and other costs of living than a year earlier.

Economists expect it eased a bit to 3.3% from July’s 3.4% inflation rate. That remains well above the 2% target that the Federal Reserve has set as its goal.

In the bond market, the yield on the 10-year Treasury rose to 4.79% from 4.78%. It is near its highest level since the autumn of 2023.

The Fed meets next week to decide whether to cut, raise or hold interest rates steady. The traditional move for the Fed when inflation is high is to raise its main interest rate. But President Donald Trump has been lobbying for lower interest rates.

Japan’s central bank also will meet next week to decide on its benchmark rate. Market watchers are expecting an increase, with the question shifting to by how much and if there will be more rate hikes this year.

The U.S. Treasury secretary has made public remarks widely seen as critical of Japanese government policies that tend to favor a weak yen.

“Treasury Secretary Scott Bessent delivered an unusually forceful message to yen bears, declaring that traders could ‘bet against’ him following the joint U.S.-Japan yen intervention on 31 July,” Ng Jing Wen, an analyst at Mizuho Bank, said in a commentary.

In currency trading early Wednesday, the U.S. dollar fell to 153.36 Japanese yen from 153.99. The euro cost $1.1632, inching up from $1.1624.

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AP Business Writer Stan Choe contributed to this report.

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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama

Yuri Kageyama, The Associated Press