Asian Stock Markets Decline as Fresh US-Iran Strikes Hurt Sentiment
Asian stock markets moved lower on Thursday after renewed U.S. military strikes on Iran weakened investor optimism surrounding a potential near-term peace agreement in the Middle East.
Traders also remained cautious ahead of the release of key U.S. inflation data later in the day, which could influence expectations for Federal Reserve interest rates.
Despite Wall Street closing at record highs overnight on hopes of easing geopolitical tensions and lower oil prices, investor sentiment quickly deteriorated during Asian trading hours.
U.S. stock futures traded mostly flat during the Asian session.
Fresh US-Iran Strikes Renew Market Uncertainty
Market sentiment weakened after reports emerged that the United States carried out another round of military strikes on Iran on Wednesday, marking the second wave of attacks this week.
The renewed escalation came shortly after U.S. President Donald Trump rejected reports suggesting Iran and Oman could jointly oversee shipping operations through the Strait of Hormuz under a proposed peace framework.
Oil prices rebounded more than 2% following the latest strikes, recovering part of the sharp losses recorded on Wednesday.
Brent crude traded near $97 per barrel, while U.S. West Texas Intermediate crude climbed above $90 per barrel.
Japanese and South Korean Markets Pull Back
Japan’s Nikkei 225 index slipped 0.1% to 64,921.1 points after reaching a record high of 66,428.81 in the previous session.
Japan’s broader TOPIX index also edged 0.2% lower.
Meanwhile, South Korea’s KOSPI index dropped 1.1% to 8,139.21 points after hitting record highs on Wednesday.
Technology and semiconductor stocks came under pressure as investors reduced exposure to risk-sensitive assets amid geopolitical uncertainty and ahead of major U.S. economic data.
Hong Kong and China Stocks Also Weaken
Hong Kong’s Hang Seng Index declined nearly 2%, weighed down by weakness in major technology shares.
China’s Shanghai Composite index fell 0.4%, while the blue-chip CSI 300 index dropped 1.1%.
Singapore’s Straits Times Index lost 0.7%, while futures linked to India’s Nifty 50 index declined 0.3%.
Australia’s S&P/ASX 200 index also moved lower, falling approximately 1.1%.
Investors Await Key US PCE Inflation Data
Investors are now closely focused on the upcoming U.S. Personal Consumption Expenditures (PCE) price index data scheduled for release later on Thursday.
The PCE report is the Federal Reserve’s preferred inflation measure and could play a major role in shaping future monetary policy expectations.
Markets remain concerned that persistently elevated oil prices driven by the Iran conflict could increase inflationary pressures and potentially force the Federal Reserve to maintain higher interest rates for longer or even consider additional rate hikes later this year.
