Emerging Asian stocks and currencies were largely subdued on Wednesday after Iran's ballistic missile strike on Israel provoked fears of a wider regional conflict and led investors to flee to safe-haven assets, including the US dollar.

The Japanese yen and the Indonesian rupiah declined over 0.3%, each. Equities in Jakarta and Seoul dipped 0.7% and 0.2%, respectively.

In response to Israel's actions against Tehran's Hezbollah allies in Lebanon, Iran launched a series of ballistic missiles at Israel, who in turn promised a "severe retaliation" against its adversary.

Escalating geopolitical conflicts can trigger swift downturns in markets, especially in risk-prone emerging markets, while traditionally safe assets such as gold and Treasuries often see an influx of investments.

Meanwhile, Indonesia's inflation rate in September recorded its slowest increase in almost three years, providing the country's central bank with more room to execute rate cuts.

The rupiah, which has gained more than 1% this year, rose by 0.6% during the quarter ended September, enough to completely offset its prior losses from the previous quarter, when it fell nearly 8%.

Investors are now awaiting inflation figures from the Philippines on Friday, expecting it to determine the pace of future interest rate cuts by the Bangko Sentral ng Pilipinas (BSP).

As inflation is forecast to continue its downward trend, market expectations are mounting the BSP could further lower rates at its two remaining policy meetings this year, in October and December.

Among other regional currencies, the Malaysian ringgit and the Philippine peso were largely flat, last up 0.1% each. The Thai baht was down 0.2%, after slipping from early 2022 highs in the previous session.

In the United States, Fed chair Jerome Powell countered expectations of drastic easing measures, projecting that the central bank would likely continue with quarter-percentage-point rate cuts in the future.

That led to a 0.5% gain in the US dollar index overnight to 101.2, its largest rise since Sept 25, which was also helped by a stronger-than-expected reading on US job openings.

"Our view is that Asian currencies will broadly rise gradually, as we anticipate the US employment rate will not go up significantly and as China's stimulus impacts on markets will remain positive," Ryota ABE, an economist at SMBC said.

Following China's weekend stimulus measures, Shanghai shares had their strongest trading day in 16 years on Monday, as global investors flocked to invest in previously downtrodden Chinese stocks.

Financial markets in Taipei were shut ahead of the arrival of a weakening Typhoon Krathon. Onshore financial markets in China are closed for the rest for the week due to public holidays.

Other equities were largely mixed, with those in Kuala Lumpur and Bangkok slipping 1% and 0.7%, respectively, while shares in Singapore and Manila rose marginally by 0.2% each.

  - Reuters