Asian stock markets posted gains on Thursday, lifted by a rebound in semiconductor shares, even as surging oil prices — driven by a fresh outbreak of hostilities in the Gulf region — raised inflation concerns and pressured bond markets worldwide.
Crude oil prices advanced for a third consecutive session after President Donald Trump declared that an interim agreement with Iran to end the conflict was “over.” U.S. forces carried out new strikes on Iran for the second day in a row in an effort to reopen the Strait of Hormuz. Trump later indicated he did not anticipate a return to all-out war, which helped ease some investor anxiety.
Brent crude futures climbed 0.8% to $78.65 per barrel, putting oil up 9% on the week and pushing it above $80 a barrel for the first time since June 22. The spike rattled global bond markets and increased expectations that the Federal Reserve may need to raise interest rates this year to keep inflation in check. Fed funds futures now point to roughly 38 basis points of tightening in 2025 — back to levels seen just a week ago.
U.S. stock markets initially dropped following Trump’s remarks but recovered somewhat, with the Nasdaq finishing with a modest 0.2% gain. Chip manufacturer Nvidia jumped 3.6% after reports emerged that China is considering allowing its leading artificial intelligence companies to purchase a limited quantity of the company’s H200 chips.
The MSCI index tracking Asia-Pacific markets outside Japan gained 0.8%, while Japan’s Nikkei rose 2.3%, snapping a three-session losing streak. South Korea’s KOSPI surged 3.8%, powered by a 3.6% rise in Samsung shares and a 7.5% jump in SK Hynix, as investors moved to capitalize on the recent selloff in chipmakers.
U.S. stock futures were little changed during Asian trading hours, while European stock futures gained 0.9%.
Chris Weston, head of research at Pepperstone, offered this take on market sentiment: “At this stage, the market still appears skewed towards the view that the conflict ultimately de-escalates, and negotiations resume around the Memorandum of Understanding.”
He added a note of caution: “Nevertheless, traders understand the need to remain open-minded. The situation remains highly fluid, and conviction around timing is exceptionally difficult.”
Newly released minutes from the Federal Reserve revealed that some policymakers had already been making the case for a rate increase, citing growing inflation concerns, before the group ultimately agreed to hold rates steady at last month’s meeting.
The global bond market selloff extended into Asian trading. The yield on Japan’s 10-year government bond climbed 1.5 basis points to 2.880%, its highest level since September 1996. Australia’s equivalent yield rose 4 basis points to 4.924%, the highest point since early June. The benchmark U.S. 10-year Treasury yield added another 2 basis points to reach 4.5852% on Thursday, following a 4-basis-point rise the previous night, putting it up 10 basis points for the week.
Currency markets showed a more restrained reaction. The U.S. dollar slipped 0.2% against the Japanese yen to 162.38, not far from a 40-year high of 162.84, as traders remain cautious about the possibility of Japanese intervention. The euro edged up 0.1% to $1.1428, and the British pound also gained 0.1% to $1.3401, just below a three-week peak of $1.341.
Gold held steady at $4,079 per ounce.
