SINGAPORE, June 11 – Stock markets throughout Asia dropped Thursday morning, dragged down by Wall Street’s decline after US inflation data came in higher than anticipated, while fresh American military action against Iran pushed oil prices higher.
The MSCI Asia-Pacific index excluding Japan slipped 0.9%, with South Korea’s KOSPI leading declines with a 3% fall. Futures for the S&P 500 traded 0.3% in the red.
America launched new military strikes targeting several Iranian locations, according to US military officials Wednesday, coming just hours after President Donald Trump promised additional attacks unless a peace agreement is reached. Iran responded by announcing it would shut down the Strait of Hormuz. When Asian trading opened, Brent crude jumped 2% to reach $94.93 per barrel.
Market analysts suggest that Asian equities which posted the strongest gains over the previous two months may continue their recent slide, as investors doubt whether the elevated profit growth projections that fueled earlier rallies can be sustained.
“Given already stretched valuations, these extreme bullish expectations set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector,” stated Rupal Agarwal, Asia quant strategist at Bernstein in Singapore, in a client note.
Reducing holdings in these equities would be “most prudent,” she continued, observing that “the re-escalation on the war front could further accelerate this unwind.”
During Wednesday’s session, the S&P 500 declined 1.6% while the Nasdaq Composite fell 2.0% following reports that US inflation picked up pace last month at its quickest rate since April 2023, though matching market forecasts. Brent crude finished at $93.10 per barrel, gaining $1.65 or 1.8%, as President Donald Trump warned of potential renewed strikes against Iran.
The US dollar index, tracking the currency’s performance versus six major counterparts, remained stable at 100.03, staying within the narrow band where it has traded over the past week. Safe-haven demand has pushed the world’s primary reserve currency to its highest point since US-Iran ceasefire talks began in early April.
At the same time, market bets on when the next interest rate increase might occur shifted slightly, though sentiment remains evenly split. Federal funds futures now indicate a 51.6% likelihood that the Federal Reserve will raise rates at its October 28 two-day session, compared to yesterday’s 50.1% odds that the central bank would wait until December, based on CME Group’s FedWatch tool.
The 10-year US Treasury yield climbed 2.6 basis points to 4.564%.
Bitcoin declined 0.5% to $61,445.19, while ether dropped 0.6% to $1,619.04, as the pending SpaceX IPO prompted investors to move away from cryptocurrencies and other high-risk investments.
Gold fell 0.3% to $4,059.59.
